The exact wording that Twitter used in its TOS is: Twitter is allowed to “use, copy, reproduce, process, adapt, modify, publish, transmit, display and distribute” your tweets because that’s what we do. However, they are your tweets and they belong to you. Ok, but if Twitter can do all that, what's left? What's really yours here? Well, there's one thing you can do.
To my knowledge, Twitter doesn't promise any kind of back up for your data; this responsibility lies entirely on the user. However, you're not completely helpless here. There are a couple of services out there that can back up your entire collection of tweets!
We've already had a detailed look at Lifestream Backup, a service that works not only with Twitter, but also with Flickr, Photobucket, Google Docs, Wordpress, Delicious, Basecamp, and Zoho. The service isn't free, though; having your social universe backed up will cost you a monthly fee of $4.95, and you can try it out in a 15 day free trial.
Another similar service is TweetSaver, which only works with Twitter, and costs $5 per month. Its advantages are a simple, clear interface, the ability to tag and search your tweets, and share them with friends.
Finally, there's TweetBackup, a service that may not be as sophisticated as the above two but has the advantage of being completely free. It doesn't ask for your Twitter password and it offers a daily backup of all your tweets.