terminal height cannot exceed one monitor?

Hi All,

Using 10.7.5, with a multiple monitor setup (Macbook Pro Retina + external), and the external monitor arranged to be directly above the laptop display. Menu bar located at the top of the upper (i.e. external) screen.

I am unable to resize a Terminal.app window to be larger than the height of the monitor it is located on, even if it already has been moved to span both monitors a little bit. Is this deliberate?

The restriction doesn't seem to apply horizontally - i can rearrange the displays and make a single terminal wide enough to span both. As another interesting data point, the font quality degrades noticeably when the width exceeds 500 characters (for my chosen font size, it might depend on that), but that's not my main problem.

Has anyone seen this? Is it fixed in e.g. Mountain Lion?

Cheers!