I just hacked Alex's wonderful Twitter Tools plug-in with the (also wonderful) wp-chunk plug-in because long URLs in tweets were breaking my layout.
If you need this as well, you can download the hacked Twitter Tools v1.0 plug-in here and replace the one you're currently using. Be sure to check Alex's site to make sure there aren't any more recent versions of Twitter Tools (> 1.0). If one exists, you should probably use it instead of this one.
UPDATE: Alex fixed the problem in an unreleased version that is currently checked into SVN. Download that version instead. Note that Alex's version requires wp-chunk to be installed.