URL Shrink is a new OS X tool with a very simple purpose - converting URLs to shorter permalinks on various web services. As the internet has matured, and services like IM, IRC, and Twitter have forced us to write shorter messages, it was clear that a system was needed that was as ubiquitous as Quicksilver.
For now, the main service of URL Shrink is just converting a URL that is on the clipboard, although this will be expanding over time (including things like a system text service, a command line client, a Quicksilver plugin, etc.). To do this, there is a keyboard shortcut (option-shift-space) which will convert the URL in the background to a tiny URL using one of the services provided. If you've selected one as your favorite, it'll choose that one. For example, I'm personally partial to is.gd, so all the URLs that are processed by URL Shrink on my machine go through is.gd.
At a low level, URL Shrink is a system where multiple shrinking engines can be added. It was designed to be extremely easy for developers to write just a little bit of code to integrate with other web services, including private URL services. For information on that, see the project page below.
URL Shrink is licensed under the BSD license. I encourage its adoption within other applications; I'll be adding .framework and .a targets for building this into Mac and iPhone apps respectively. Indeed, the project was born out of the URL shrinking capacity of another app I'm working on.