The Terminal Emulator coming pre-installed with CM 10 (IMHO it is Android Terminal Emulator) is intended to let you access the command line. People using a custom ROM usually have use for such things -- and it is very helpful for certain kinds of troubleshooting, as via the command line you can directly access the necessary Linux tools to check certain things.
Aside from that, I cannot imagine it being "essential" to the system, so removing it should have no side-effects. But it would not bring you any benefit either: residing on the
/system partition, uninstalling wouldn't give you more space in the "internal storage" -- and as the app only consumes other ressources when you start it, there's nothing to gain here as well.
It might prove very useful at some future point, so I'd recommend you keep it. If you really want to get rid of it: as with any other app you don't know whether it might be needed, first "freeze" (disable) it and watch carefully for possible side-effects (none to expect here), and after a week or so, if no side-effects appear, you can go ahead and drop it.