diff --git a/ChangeLog b/ChangeLog
index 7fb2a031c..34e88c0c5 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -1,3 +1,26 @@
+2006-01-15  Elijah Newren  <newren@gmail.com>
+
+	Fix accidental overzealous focus holding by the terminal
+	introduced by the original patch in bug 326159.  Windows launched
+	from panel icons, the panel menu, or global keybindings should get
+	focus now.  #326159.
+
+	* src/display.c (meta_display_open, event_callback): 
+	* src/display.h (struct MetaDisplay):
+	* src/keybindings.c (process_event):
+	* src/window.c (meta_window_set_user_time):
+	Add a new allow_terminal_deactivation field to MetaDisplay and use
+	it to track whether the user's last action was interaction with
+	the terminal or some outside action (global keybinding, clicking
+	on a dock, etc.) likely to launch a new window.
+
+	* src/window.c (window_state_on_map):
+	Allow the focus switch from a terminal to something else if
+	allow_terminal_deactiviation is true.
+
+	* src/keybindings.c (handle_panel_keybinding):
+	Remove some unneeded code.
+
 2006-01-15  Elijah Newren  <newren@gmail.com>
 
 	Patch from Jens Granseuer to fix more build issues with gcc 2.95.
diff --git a/src/display.c b/src/display.c
index b1de733b3..fca268548 100644
--- a/src/display.c
+++ b/src/display.c
@@ -336,6 +336,8 @@ meta_display_open (const char *name)
   display->grab_old_window_stacking = NULL;
 
   display->mouse_mode = TRUE; /* Only relevant for mouse or sloppy focus */
+  display->allow_terminal_deactivation = TRUE; /* Only relevant for when a
+                                                  terminal has the focus */
 
 #ifdef HAVE_XSYNC
   display->grab_sync_request_alarm = None;
@@ -1687,6 +1689,11 @@ event_callback (XEvent   *event,
                                   window->desc, event->xbutton.button);
                       meta_window_focus (window, event->xbutton.time);
                     }
+                  else
+                    /* However, do allow terminals to lose focus due to new
+                     * window mappings after the user clicks on a panel.
+                     */
+                    display->allow_terminal_deactivation = TRUE;
                 }
               
               /* you can move on alt-click but not on
diff --git a/src/display.h b/src/display.h
index d89558c04..0afc5242b 100644
--- a/src/display.h
+++ b/src/display.h
@@ -204,6 +204,14 @@ struct _MetaDisplay
    */
   guint mouse_mode : 1;
 
+  /* Helper var for strict focus for terminals; only relevant if the focus
+   * window is a terminal.  Typically, we don't allow new windows to take
+   * focus away from a terminal, but if the user explicitly did something
+   * that should allow a different window to gain focus (e.g. global
+   * keybinding or clicking on a dock), then we will allow the transfer.
+   */
+  guint allow_terminal_deactivation : 1;
+
   guint static_gravity_works : 1;
   
   /*< private-ish >*/
diff --git a/src/keybindings.c b/src/keybindings.c
index 2cdd13fee..1477b7e34 100644
--- a/src/keybindings.c
+++ b/src/keybindings.c
@@ -1540,6 +1540,12 @@ process_event (MetaKeyBinding       *bindings,
                         "Running handler for %s\n",
                         bindings[i].name);
           
+          /* Global keybindings count as a let-the-terminal-lose-focus
+           * due to new window mapping until the user starts
+           * interacting with the terminal again.
+           */
+          display->allow_terminal_deactivation = TRUE;
+
           (* handler->func) (display, screen, window, event,
                              &bindings[i]);
           return;
@@ -2809,13 +2815,6 @@ handle_panel_keybinding (MetaDisplay    *display,
       break;
     case META_KEYBINDING_ACTION_PANEL_RUN_DIALOG:
       action_atom = display->atom_gnome_panel_action_run_dialog;
-      /* We want the dialog to take focus from a terminal since this
-       * should be considered an explicit focus transfer.
-       */
-      if (__window_is_terminal (display->focus_window))
-        meta_display_focus_the_no_focus_window (display, 
-                                                screen,
-                                                event->xkey.time);
       break;
     default:
       return;
diff --git a/src/window.c b/src/window.c
index f16df6543..74ff58c2d 100644
--- a/src/window.c
+++ b/src/window.c
@@ -1781,6 +1781,7 @@ window_state_on_map (MetaWindow *window,
    * approximation to enforce so we do that.
    */
   if (*takes_focus &&
+      !window->display->allow_terminal_deactivation &&
       __window_is_terminal (window->display->focus_window) &&
       !meta_window_is_ancestor_of_transient (window->display->focus_window,
                                              window))
@@ -7886,5 +7887,11 @@ meta_window_set_user_time (MetaWindow *window,
       window->net_wm_user_time = timestamp;
       if (XSERVER_TIME_IS_BEFORE (window->display->last_user_time, timestamp))
         window->display->last_user_time = timestamp;
+
+      /* If this is a terminal, user interaction with it means the user likely
+       * doesn't want to have focus transferred for now due to new windows.
+       */
+      if (__window_is_terminal (window))
+        window->display->allow_terminal_deactivation = FALSE;
     }
 }