Not sure if this is zsh, iterm2 or the interaction between them.
Trying to change the number of recallable lines in the terminal - not the command history, the output history.>
With zsh and iTerm2 Build 3.2.5, an additional step is required: Preferences->Profiles->terminal->check UnlimitedScrollback->Check save lines to scrollback when an app status bar is present
Scrolling was breaking for me without the last one.