Go2Shell stopped working with iTerm2

I am on Yosemite and have used a (seemingly older version) of Go2Shell to open Terminal windows at the current Finder location. This worked flawlessly for a long time, until something, suddenly broke with no apparent reason. When clicking the icon in Finder, a terminal would open up, but not in the current directory. I then installed the most recent Go2Shell and reinstalled iTerm 2.

• Go2Shell version: 2.2
• iTerm version: 2.1
• Go2Shell command: cd %PATH%;clear;ls

Symptoms

A Terminal window opens up in the home directory, displaying the string cd but nothing else. The %PATH% expansion does not seem to ever reach iTerm. Actually, upon experiment it can be verified that the command is cut off at the first space and never executed, only pasted. Whenever I click the Go2Shell icon, the following is logged in console:

AppleEvents: Send port for process has no send right, port=( port:14135/0x3737 rcv:1,send:0,d:0 limit:5) (findOrCreate()/AEMachUtils.cp #526) com.apple.main-thread

Go2Shell continues to work as expected with Apple Terminal.

I am in contact with Go2Shell developer's support, however they seem to be unable to reproduce it.

Has anyone experienced something like this?

This is likely too localized, but I had the following in my .bash_login (at the very end):

stty werase undef
bind '"\C-w": backward-kill-word'
bind '"\C-j": unix-word-rubout'

Commenting out the last line solved the problem, although of course I am missing this functionality now.