Terminal is always opened in $HOME

There is a nautilus add-on which is to open the terminal in the location nautilus has open. Install and use that

That's what I'm using, in fact I filed the question against that very plugin.

If you have a bug then why make a question too?

Not sure what is the confusion: I did not file a bug, I filed this very question. Not sure what's unclear about the question?

A question isn't a bug report. If you run:

ubuntu-bug nautilus-open-terminal

It will start the process for you.

Once again: I am *not* reporting a bug. I am asking a question on how to make the nautilus-open-terminal plugin work with gnome-terminal when for the setup I have. I am *not* assuming the behavior described is a bug because I don't know what the intended/expected behavior is. If you are, upon fully assessing my question, suggesting that this is not the expected behavior and I should file a bug report instead, than please make that a bit more clear.

Are you sure that the program that you are talking about is "nautilus-open-terminal"? Such package exists only up to Ubuntu 14.04 (in the Ubuntu-provided repositories for supported releases).

This package has been replaced by the nautilus-extension-gnome-terminal package (from gnome-terminal source).

Manfred, thanks for the feedback!

Apologies, I did not realize the functionality has moved to another package -- not clear to me however which one as the nautilus-extension-gnome-terminal does not seem to exist:
$ apt show nautilus-extension-gnome-terminal
N: Unable to locate package nautilus-extension-gnome-terminal
N: Unable to locate package nautilus-extension-gnome-terminal
E: No packages found

Is it "gnome-terminal" itself or "libnautilus-extension1a" that provides the "Open in Ternial" functionality? My question still remains and I'd repost it (in the right place) if recommended.

For diagnostic purposes, what is the output of the commands

uname -a
lsb_release -crid
dpkg -l | grep -e nautilus -e terminal

$ uname -a
Linux XXXXX 4.13.0-45-generic #50~16.04.1-Ubuntu SMP Wed May 30 11:18:27 UTC 2018 x86_64 x86_64 x86_64 GNU/Linux

$ lsb_release -crid
Distributor ID: Ubuntu
Description: Ubuntu 16.04.5 LTS
Release: 16.04
Codename: xenial

$ dpkg -l | grep -e nautilus -e terminal
rc aptitude 0.6.8.2-1ubuntu4 amd64 terminal-based package manager
ii gnome-terminal 3.18.3-1ubuntu1 amd64 GNOME terminal emulator application
ii gnome-terminal-data 3.18.3-1ubuntu1 all Data files for the GNOME terminal emulator
ii irssi 0.8.19-1ubuntu1.7 amd64 terminal based IRC client
rc libcwidget3 0.5.16-3.5ubuntu1 amd64 high-level terminal interface library for C++ (runtime files)
ii libnautilus-extension1a:amd64 1:3.18.4.is.3.14.3-0ubuntu6 amd64 libraries for nautilus components - runtime version
ii libncurses5:amd64 6.0+20160213-1ubuntu1 amd64 shared libraries for terminal handling
ii libncursesw5:amd64 6.0+20160213-1ubuntu1 amd64 shared libraries for terminal handling (wide character support)
rc libncursesw5:i386 5.9+20140118-1ubuntu1 i386 shared libraries for terminal handling (wide character support)
ii libterm-readkey-perl 2.33-1build1 amd64 perl module for simple terminal control
ii libtext-charwidth-perl 0.04-7build5 amd64 get display widths of characters on the terminal
ii libtinfo5:amd64 6.0+20160213-1ubuntu1 amd64 shared low-level terminfo library for terminal handling
ii libtinfo5:i386 6.0+20160213-1ubuntu1 i386 shared low-level terminfo library for terminal handling
ii nautilus 1:3.18.4.is.3.14.3-0ubuntu6 amd64 file manager and graphical shell for GNOME
ii nautilus-data 1:3.18.4.is.3.14.3-0ubuntu6 all data files for nautilus
ii nautilus-dropbox 2.10.0-2 amd64 Dropbox integration for Nautilus
ii nautilus-sendto 3.8.2-1ubuntu1 amd64 integrates Evolution and Pidgin into the Nautilus file manager
ii nautilus-share 0.7.3-2ubuntu1 amd64 Nautilus extension to share folder using Samba
ii ncurses-base 6.0+20160213-1ubuntu1 all basic terminal type definitions
ii ncurses-bin 6.0+20160213-1ubuntu1 amd64 terminal-related programs and man pages
ii ncurses-term 6.0+20160213-1ubuntu1 all additional terminal type definitions
ii python-ptyprocess 0.5-1 all Run a subprocess in a pseudo terminal from Python 2
ii python3-ptyprocess 0.5-1 all Run a subprocess in a pseudo terminal from Python 3
ii screen 4.3.1-2build1 amd64 terminal multiplexer with VT100/ANSI terminal emulation
ii sysv-rc-conf 0.99-7 all SysV init runlevel configuration tool for the terminal
ii terminator 0.98-1 all multiple GNOME terminals in one window
ii xterm 322-1ubuntu1 amd64 X terminal emulator

The program handling that seems to be neither from nautilus-open-terminal nor nautilus-extension-gnome-terminal.

OK, I understand. Any suggestion where to go next?