molecular:
can the Trezor ppl see our balances and tx's while the Trezor is logged into myTrezor.com?
yes, unfortunately. At least they're not using your xpub key to transfer addresses to watch, so they don't know your future keys (except the 5 or so per account they scan ahead).
you mean xpub key as it applies to an HD wallet (master public key)? what do you mean "except the 5 or so per account they scan ahead"?
yes, exactly, the hd wallet master public key.
instead they send indidvidual addresses for watching to the server (not 100% sure, but I think that's what slush told me some time ago). Since the wallet doesn't know which addresses you gave out, it has to watch a couple of addresses that come after the last one that has received money. Maybe myTrezor watches all addresses it has displayed to the user or something along those lines, I'm not sure.
That's my biggest criticism with myTrezor and it's why I switched to electrum as soon as the development code had trezor working. It's not perfect with electrum, either, but better (I don't know exactly what, but they do some stuff to increase privacy towards server operators).
why would electrum be better in terms of privacy?
I've been meaning to research this. I'll let you know when I've come around to it.
I went to the hassle of running my own electrum server (public, of course, so I can hide in the masses when broadcasting transactions). Feel free to use it (electrum.0x0000.de), I'm not logging anything or looking at the traffic in any way.
how does one use electrum with the Trezor?
Use the electrum 2.0 beta, it has a trezor plugin. You will see the same wallet you see with myTrezor, both wallets can be used in parallel if you desire that.