Looks good at my test setup:
stream = client.CreateShellStream(@"vt100", 80, 24, 800, 600, 1024);
stream.Write("env | grep TERM\n");
stream.Write("echo $TERM\n");
=># env | grep TERM
TERM=vt100
# echo $TERM
vt100
What does your ENV looks like after creating the shell stream?