As a followup to my earlier post, I have found a solution to the mouse
scroll wheel problem. I discovered a program called KatMouse, located
at

http://ehiti.sdf-eu.org/katmouse/

that completely solved the problem. The mouse wheel now behaves
exactly as expected in Kermit 95.

One caveat is that it will not work with Windows 9x/ME, only
NT/2000/XP. Not a problem for me, as I only use 32-bit Windows.