Proprietary applications spy on their users constantly. It's no surprise that Swype is making these location requests. Rooting your phone isn't an answer in itself. Rooting allows you to install a more free Android distro like Replicant or CyanogenMod. However, if you're still using proprietary applications then you haven't accomplished too much.

iOS users have no chance at all. There is no freedom in the iThings. Apple is in strict control over their users.