Apple script to open an iterm2 tab from right-clicking on a file or folder in Finder. To use: (1) Open Automator (2) Create a new service (3) Change "Service receives selected" drop downs to "Files or folders" in "Finder" (4) Select "Run applescript" from the sidebar, then paste this script in and save

Open iterm tab here

-- Adapted from these sources:
-- http://peterdowns.com/posts/open-iterm-finder-service.html
-- https://gist.github.com/cowboy/905546
-- 
-- Modified to work with files as well, cd-ing to their container folder
on run {input, parameters}
  tell application "Finder"
		set my_file to first item of input
		set filetype to (kind of (info for my_file))
		-- Treats OS X applications as files.  To treat them as folders, integrate this SO answer:
		-- http://stackoverflow.com/a/6881524/640517
		if filetype is "Folder" or filetype is "Volume" then
			set dir_path to quoted form of (POSIX path of my_file)
		else
			set dir_path to quoted form of (POSIX path of (container of my_file as string))
		end if
	end tell
	CD_to(dir_path)
end run

on CD_to(theDir)
	tell application "iTerm"
		activate
		try
			set t to the last terminal
		on error
			set t to (make new terminal)
		end try
		tell t
			launch session "Default Session"
			tell the last session
				write text "cd " & theDir
				write text "ls"
			end tell
		end tell
	end tell
end CD_to

How could this be altered to allow the menu item to show when white space is clicked?

I second zakdances' request, that would be awesome.

It has always annoyed me that you don't get "Services" in the right click menu when your target is the background of the window... I mean it should technically be a valid target for a service that receives folders... alas nothing can be done other than send apple feedback requesting it http://www.apple.com/feedback/macosx.html

Not quite a solution to zakdances question, but you can do a shortcut instead...
Instead of using "service receives selected" choose "no input" in "finder", then add the "Get selected Finder Items" action from the developer tab and place it above this script. Since the action then does not require arguments it now works with keyboard shortcuts. To set it go to system preferences > keyboard > shortcuts > services and find your script under "General". you should be able to set a shortcut and have it work on any file or folder in finder.
thanks for the post eric-hu! I've been looking for this solution for a long time!

@delgadom -- Thanks for sharing that addition. I now have both the Service above and another keyboard shortcut service.

For people who are setting up the keyboard shortcut, note that once I had it set up, the keyboard shortcut wasn't working until I went into finder, clicked File -> Services -> (my new keyboard shortcut). After that, my keyboard shortcut worked. Also note that some OS X hotkeys can't be easily disabled (I wanted to override iCloud's default Cmd + Shift + i. I settled for ctrl-i).

For applescript that works with iTerm2 nightly this fork works:
https://gist.github.com/shuntaroy/e5ce3ad61c0deb7e27f0

using the code provided by OP. I got this error Expected class name but found identifier.

I'm getting the same error as craigcosmo

Here's my working fork, tested against latest iTerm2.

mainly changed:

• detect file type by shell script, fix the problem in fork by @Leglaw that non-English (e.g. Chinese) locale may encounter.
• create new tab if existing window is detected, instead of always creating new windows.

iTerm updated their interface. For those who keep getting error, have a try with it~ @craigcosmo @kitizz

It's working for mw now @ttimasdf Thanks for the correction

@ttimasdf not working for me, im getting this: