I'm not a sysadmin, but I use a Windows 2003 server at work fairly often for testing purposes, and I'm always annoyed by the limitations of the standard Windows console terminal.
Is there some "industry standard" tool that I don't know about, to replace this terminal with a more fully-featured one? What is the best 3rd party Windows console, if any? Are there any good free/open source tools for this?
Not covered in Graeme's response is QuickEdit mode.
When I first set up a machine I always enable QuickEdit mode and make the buffer and window sizes much bigger - it makes working with the prompt much nice.
QuickEdit mode lets you copy and past in an xterm like way by just selecting with the left mouse and copying with the right mouse (if nothing is selected right mouse will paste).
To turn on QuickEdit mode right click on the menu bar (or left click on the icon on the menu bar) and go to properties.
QuickEdit is on the Options page and the window and buffer sizes are on the Layout page.