Other users with Privacy Guard installed as well (so they can see the amount of location requests) who have not blocked location access report that it only made the request once.
So it just sounds like if it fails the initial request it continues to retry every few minutes. In my opinion it seems like a bug rather then anything malicious.
However the posters in the thread do have a good point that there is really no reason for Swype to even need this permission.
4000 / 24 * 60 = 4000 / 1440 = 2.777 => 60 / 2.7 = 21 seconds
Accessing GPS every 20 secs just can't be what they had in mind when they implemented it. (not even in case it fails, because it would prevent the CPU from going into deep sleep, which saves battery)
What I believe is happening:
The developers of Swype didn't test for that error, because Google Play filters the app for all devices that don't have GPS, so the device is expected to have the hardware and to return some specific error in case it doesn't work (GPS turned off and so on)
And the CyanogenMod privacy feature interferes in a way, that causes an unexpected error that they didn't account for.
Combine that with the lack of an exponential backoff and you'll get this result.