How to change fonts picked by Terminal.app to display languages other than English?

You can set the font for terminal in the terminal preferences. (Terminal -> Preferences... then select the "Settings" tab and "Text" sub-tab. Fonts are choses based on profiles so you could set up a profile with an Arabic font.

You must have monospaced Arabic font installed. You'll need to to search the internet for one.

Most important, for using using Vim read this:

http://vim.dindinx.net/orig/html/arabic.txt.php

The default version of Vim on the Mac is compiled with "-arabic" so it will never give you what you want, you'll need to recompile you own version (try homebrew) also MacVim may work (GUI version of Vim so no terminal necessary).