Unfortunately Telnet has some very basic founding flaws that simply aren’t unacceptable for anyone who is even remotely interested in securing their data and communication through the internet (especially if you’re storing personal info in your home directory or website).
I’ll point you to the wiki article as a starting point on some of the basic flaws in telnet (that still exist today): http://en.wikipedia.org/wiki/TELNET
It also mentions the SASL/TLS plug-ins, though I’m unaware of those being available for DH’s telnet sessions (based on a google search anyways). The basic telnet authentication provided by MS Windows 2k I know is easily exploited. There’s even programs available that will allow you to brute force you way into your own server, just to see how insecure it really is.
Anyways, while I’m sure the “DH Guys” have some mechanism in place to prevent such brute force logins, I find providing such insecure access to be very unusual among web providers these days. That is, those who even offer it. It’s like spreading or promoting ignorance, and I just can’t accept that.