ctrl-o behavior in Terminal.app
⌃+O is, for some reason (probably having to do with it being used for flow control on some kinds of serial connections) set to be discarded by the terminal driver (i.e. not Terminal.app, but the part of the OS between it and the shell).  You can get rid of this with the command stty discard undef.  To make this change permanent, add this command to your .bash_profile and .bashrc files.