Why is flickt.to.twitt asking for Flickr permissions has if it was a desktop application and not a web based one?
This is in order to avoid that you need to authorize again in the future. Also we're developing Android and iPhone/iPod/iPad clients for flick.to.twitt and this is the only way we could ever do it.
Do you store any of my Twitter or Flickr passwords?
No! We use OAuth for both services.