ex: 0602-108 xterm-color is not a recognized terminal type.
[Press return to continue]
After I acknowledge the error, VI would be essentially unusable.
Luckily for me, I was able to find a post from back in 2004 about the same issue on earlier versions of Mac.
"Setting terminal to be recognized for SSH."
http://forums.macosxhints.com/showthread.php?t=19246
http://forums.macosxhints.com/showthread.php?t=19246
While the suggestion they had for creating the ~/.ssh/environment file did not work for me, setting TERM=vt100 before I ran ssh in Terminal did allow me to use VI properly in the SSH session.