`vi` command doesn't open newly installed Vim 7.4 on OS X

Whenever you change paths, or install new binaries, you should always:

• restart your shell, or
• rehash the loaded binaries (e.g. in Bash with hash -r or Zsh with rehash)

Dependancies

• Install XCode from the App Store
• Run XCode and agree to the License Agreement on first-run

Then you can brew install vim --override-system-vi successfully. Then try running mvim -v or better yet aliasing vi and or vim to mvim -v in your ~/.bash_profile. It's an easy way out. Running plain mvim will launch a GUI vim, but with the -v flag you get to run in vim in the terminal.