How do I make Bash 4.2 the default Terminal.app shell?

Change the default shell for your user account. I would do it this way to avoid any potential issues.

1. System Preferences
2. Users & Groups
3. (Unlock if necessary) Right click your account
4. Select Advanced Options
5. Change your login shell to point at the bash you want

 

It shouldn't be necessary to replace /bin/bash. Simply make a new command, e.g. /bin/bash4, and use that.

Also, there should be a checkbox in each theme called "Run inside shell". Uncheck it and see what happens.

Finally, the Terminal Preferences pane Startup has an option "Shells open with". Have you though of setting it to the new command (e.g. /bin/bash4)?

Needless to say, you should try each of these things separately and see if it works the way you want, before moving to another one. If something doesn't work, then immediately change it back to its former value. In short, exercise ordinary programming caution: never do anything you can't immediately undo.