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73416ba
(Get the code!)
putty is unable to get access to the terminal, so while it would prompt, the user would be unable to actually type their password/etc.
So we decided that just failing was better than hanging waiting on user input that it could never get (hence -batch).
I don't know about secure terminal access. I can say that openssh has done just fine-by-me for quite some time, at prompting for my password under cygwin. (I haven't tested much in plain cmd.exe)
I always just figured it was a simple limitation of putty.
I've personally switched away and am now using Pageant + Paramiko for almost all my connections, and I think Mark Hammond was probably right about it being the most sane default. plink.exe just isn't very good as a subprocess...