How to make "open in terminal" in the right click menu use Terminator instead of gnome terminal?

The settings in gsettings set org.gnome.desktop.default-applications.terminal exec doesn't affect the behavior of the context menu entry. The used terminal is gnome-terminal and that's hard coded in libterminal-nautilus.so in the package gnome-terminal. And this library is used by Nautilus.

Perhaps this will be changed in future versions, but currently it is a fact.

A solution that might work is to add a custom right-click option to the Ubuntu context menu entry instead of changing the pre-existing one.

For that purpose you can use the Nautilus-Actions Configuration Tool that you can get from the repository using sudo apt-get install nautilus-actions.

A quite well detailed tutorial can be found here.

Add this to your ~/.bashrc file

if ps -o cmd= -p $(ps -o ppid= -p $$) | grep -q gnome; then
  nohup terminator &> /dev/null &
  sleep 0.1s
  exit
fi