Some sample code for setting the Terminal title which didn't work; and one that did.

gistfile1.eclass

# did not actually work
alias mycd="cd /path/to/directory/of/interest;
    osascript ~/Library/Scripts/set-terminal-tab-title.scpt
    `pwd | cut -d'/' -f5`;"

gistfile2.scpt

-- did not actually work...
on run argv
  tell application "Terminal"
    set terms to every window in application "Terminal"
    repeat with term in terms
      if term is frontmost then
        set tTabs to every tab in term
        repeat with tTab in tTabs
          if tTab is selected then
            set cTitle to item 1 of argv
            set custom title of tTab to cTitle
          end if
        end repeat
      end if
    end repeat
  end tell
end run

gistfile3.eclass

PS1='\[\033]0;`(basename $(pwd))`\007\]\n[\t \w]\n\u@\h $ '