How do I get the numpad to work in vim using iterm2 on osx with term=xterm?

Looks like the answer is to go into Preferences->Profiles->Keys and load preset of: "xterm with Numeric Keypad".

For me the solution was disabling VT100 Application Keypad-Mode in Preferences > Profiles > Advanced.

You can add global keyboard shortcuts in Preferences -> Keys and map the numpad characters to "Send Text" actions to send the text they are supposed to send.