Over on this thread on the forum site, there's a great discussion on how to put up dialog boxes using shell scripts. Quite a few solutions are offered, including two third-party programs -- CocoaDialog (which has some nice example scripts on their page) and Pashua. User hayne also offered up an AppleScript solution with a couple of example dialogs.
So if you need to pop up a dialog during a Terminal script, one of these methods should do the trick...
Mac OS X Hints
http://hints.macworld.com/article.php?story=20041207051821386