[wging]

Preferences -> Keys, see the heading 'Remap Modifier Keys'.

You can remap left command to left option, leaving right command as command so you can still cmd+tab out of iTerm. You might also have to to to Preferences -> Profiles -> Keys and on the bottom say that the left and right option keys both act as +Esc.

If there's a better way I'd be interested to hear it, but this works for me.