How about this? There's no need for key codes (at least in Lion, not sure about earlier), and a subroutine simplifies the main script.
The below script will ssh to localhost as user "me", enter password "myPassw0rd" after a 1 second delay, issue ls, delay 2 seconds, and then exit.
tell application "Terminal"
activate
my execCmd("ssh me@localhost", 1)
my execCmd("myPassw0rd", 0)
my execCmd("ls", 2)
my execCmd("exit", 0)
end tell
on execCmd(cmd, pause)
tell application "System Events"
tell application process "Terminal"
set frontmost to true
keystroke cmd
keystroke return
end tell
end tell
delay pause
end execCmd