Not awfully surprising. It's a toy, not a Predator. Security likely was not a major design concern, and I don't really blame them. Probably even intentional to a degree, to make (owner-sourced) hacking easier.
You know the Predators were (and possibly still are) transmitting all their video without any encryption?[1] And they've also suffered virus infection on their ground-station computers?[2]
I don't know whats running on the actual drones, but it wouldn't surprise me at all to find there's well known exploits against something like QNX or VxWorks (or, and I shudder at this thought, Windows CE) that the drones are vulnerable to whilst in-flight…
Not complaining, just slightly surprised. I thought you'd have to go to an extra effort to remove the username+password prompt from the standard telnetds :)
Looks like you read that correctly. Probably shouldn't be too surprising since they are toy helicopters, though you would probably want to close that if you try to run a taco delivery company with them.