Most of the answers here are outdated for today's Gnome software. For Gnome 3.36 there's no easy workaround. The problem lies in the fact that most Gnome software is based on Gio which it decides what terminal emulator to use eventually. Quoting a Gnome developer from gitlab.gnome.org:
The decision which terminal is going to be used by gnome-shell when starting apps that specify that they run in a terminal is made by glib and not gnome-shell and currently in glib there is a hardcoded list of terminals that is being tried: glib#338.
Hence, looking e.g at Gio's current (2.64) code responsible for this behavior, we can see that Gio has hard coded the tests for several specific terminal emulators' executables search in
gnome-terminal is tested there first and other terminal emulators are tested further. If
gnome-terminal is found in your
$PATH, it will be used and there's nothing one can do, besides altering the programs in your
# mv /usr/bin/gnome-terminal /usr/bin/.gnome-terminal.unused
# ln -s /usr/bin/lilyterm /usr/bin/gnome-terminal
This also means that the most widely solution to this problem, using
gsettings, doesn't work (also proposed here: 1, 2, 3, 4, 5).