There is a fork of the Telnet client that supports a mouse and a clipboard - I have a link to it on the mTCP home page. That version also supports Unicode and a few other goodies. I recently spoke to the author of the code and that prompted a round of performance improvements for the Unicode support. (I clued him in that a linear search through his mappings for Unicode codepoints could easily be sped up by using a binary search, or even hashing.)
I might add mouse support and cut and paste one day, but Unicode and keyboard mappings are higher on the list. In the interim that other version exists. (It is quite a bit bigger than mine though.)
Zmodem technically is useless on a TCP/IP connection ... Zmodem was faster than Xmodem or Ymodem because it borrowed the concept of a sliding window from TCP. TCP is already doing error handling and the sliding window, so Zmodem is just overhead on a TCP based connection.
Y-Modem probably makes the most sense, as it can send metadata so that you don't have to re-type filenames and the file size doesn't get rounded to the nearest block size. Xmodem and Ymodem were fairly easy to implement. Given how complicated Zmodem is, I'm taking a pass on that.
-Mike