How do I make Terminal.app's scrollbars disappear in Lion? Once I upgraded to Lion, I found out that the vertical scrollbar is always plastered to the right side of the application window. 

Because I run GNU Screen within Terminal.app, the right side of the screen session gets hidden partially underneath said scrollbar. Likewise for emacs sessions.

Is there a way to disable scrollbars in Terminal.app in Lion?
I assume you're not using a trackpad, and/or your Show scroll bars preference in System Preferences > General is set to either Automatically based on input device or Always (otherwise, you shouldn't be seeing persistent scrollbars).

Try changing this setting for Terminal only:

defaults write com.apple.Terminal AppleShowScrollBars -string WhenScrolling


Then close Terminal and reopen it for the change to take effect.