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Loads of managed switches, home routers, power control devices, etc. have telnet turned on by default (not the new ones though) - maybe they are the target?

Yep. Telnet is standard in embedded devices where there is neither the CPU power nor the electrical current available to support encrypted protocols like SSH.

Yeah I don't get it, they most be targeting something specific or using telnet to create a botnet and what is seen is communication between those bots? This article is light on details for sure. One thing I can think of using telnet for to attack the wireless network itself? Is telnet widely used for wireless tower equipment and such?

Or: it's on the list of automatic hack scripts that all the scriptkiddies use and it's being fired off as an attack because its on the list and not because there's something relevant actually happening.

telnet towel.blinkenlights.nl :-)