What about BackSpace? Is it Ctrl+H (0x08) or Ctrl+? (0x7f)?

It is sheer madness if you ask me.

There is a database called 'terminfo' which should describe
how the different terminal-types work.
(See manuals of terminfo(5), infocmp(1), tic(1), tput(1), ncurses(3) etc for details.)

But in real life many emulator-programs ignore terminfo, and send what they see fit.
(Or what the user chooses. In dtelnet it is 'Alt Backspace' setting at connect.)
The remote side also often ignores terminfo, and excepts whatever is the default
on that computer, eg Ctrl+? on linux, Ctrl+H on AIX.
(Consult manuals of stty(1), termios(3) etc.)

The result can be one of the followings:
1. backspace key is working in every contexts (try it in ksh, dash or other user-unfriendly program)
2. in some contexts backspace key produces ^H
3. in some contexts backspace key produces ^?

My suggestion:
in case 1, do nothing
in case 2, select a terminal-type in which backspace is ^? (linux, konsole*)
in case 3, select a terminal-type in which backspace is ^H (xterm*, rxvt*)

The best place for these settings is 'favorites', also known as *.ts files.

Notes:

#1:
    if you want to make the server-side more flexible, try sg like this:

    shell (.profile or similar):
	if [ -n "$TERM" ]; then
          X=$(tput kbs) && stty erase "$X"
	fi

    C:
	http://dtelnet.sourceforge.net/setbkspc.c
    
#2:
    in Linux, if you use TERM=konsole (or TERM=konsole-256color),
    and the function-keys in Midnight Commander don't work properly
    (eg Shift+F4 doesn't bring up an empty editor),
    then add this to your 'ini' or 'mc.lib' file

    [terminal:konsole]
    copy=xterm
    
    [terminal:konsole-256color]
    copy=xterm

Addition on 20150316 by LZS:
    To make linux-users' life easier I added terminal-types 'xterm-linuxbs'
    and 'rxvt-linuxbs' to dtelnet.set. In these definitions kbs=0x7F and kabs=0x08.
    (The name we send to the partner is still 'xterm' and 'rxvt'.)

    This is good for linux if you don't try to telnet/ssh from linux to other system
    (eg AIX), where xterm.kbs is 0x08

Addition on 20160128 by LZS:
    Yet another option is xterm-kbs177 -- It actually sends TERM=xterm-kbs177
    to the server, so you have to use infocmp + editor + tic on the remote side
    to create such a terminal-type; it's not trivial, and most users don't need it
    either, only those who often go from one platform (eg linux) to other platform
    (eg AIX), and experience problems with BS

    PS: Some programs like 'vim' prefer xterm-* terminals to others,
    that would be the advantage of 'xterm-kbs177' over 'konsole'


    PPS: example terminfo-manipulation:

infocmp xterm | \
    sed 's/^xterm|/xterm-kbs177|/;s/kbs=\\b/kbs=\\177/;s/kbs=^H/kbs=\\177/;' \
    >xterm-kbs177.ti
    tic xterm-kbs177.ti
infocmp -1 xterm-kbs177 xterm # check

	example Midnight Commander manipulation (the location is distribtion-dependent!):

printf '\n[terminal:xterm-kbs177]\ncopy=xterm\n' \
    >>/usr/local/share/mc/mc.lib

    P3S: also created xterm-kbsH:

infocmp xterm | \
    sed 's/^xterm|/xterm-kbsH|/;s/kbs=\\177/kbs=\\10/' \
    >xterm-kbsH.ti
    tic xterm-kbsH.ti
    infocmp -1 xterm-kbsH xterm # check

printf '\n[terminal:xterm-kbsH]\ncopy=xterm\n' \
    >>/usr/local/share/mc/mc.lib