The bad news: in 8 days as of writing, Twitter will be shutting off basic authentication for third party applications. No more entering your login/password, but a more secure OAuth system that redirects you to Twitter's site and confirm you're allowing access to your account. All this, honestly, kind of sucks.
The good news: I've updated my YOURLS: WordPress To Twitter plugin to now support OAuth, as well as a lot of other improvements. Go check it now! Update and play, you've got 8 days to return feedback if something is not working as you were expecting :)
Speaking of YOURLS, version 1.5 is coming along nicely. No, no ETA. Check out this screenshots: YOURLS interface (notice a new menu?) and, as an example of a bundled plugin, a "social" toolbar. The trunk version, labeled 1.5-beta, is stable enough if you want to play with it (I've been using it for weeks now). Join the fun and code some plugins!
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Is there anyway to turn of the Twitter Nag if I don't intend to activate my Twitter account?
Also, using the common OAuth library you do is conflicting with another plugin (I can't tell which one yet). I've deactivated all obvious Twitter related plugins, but something is conflicting.
Anyway, I think Yourls is great and support your ongoing development.
Looking forward to the next version of YOURLS. We love it and use it religiously. It's been a while since the last update, and I actually came by the site today to ask if you needed any help updating it. Glad to see a new version is on the way.