i believe the navy started the project and its currently maintained by folks in MIT. many authority groups use it along the lines of pedophile stings and the like.

AFAIK, the NSA and FBI are currently trying to "hack" tor, so that the features of anonymity are rendered useless. from what i get, they haven't been successful.

if you use privoxy effectively, and disable many of the browser add-ons like java and flash, you can mitigate the amount of information available to the sites you connect to.

i run two versions of privoxy on my box. one is forwarded to from squid on the loopback only. the other forwards traffic through tor from the ip.

for the most part the filtering is the same for both instances, but the big difference is that the logging for the second (that routes through tor) is sent to /dev/null. the point is anonymity, so why would i log what gets requested, right?

i have also found a utility called torK from sourceforge.net that allows you to manipulate the tor configuration via GUI. it also manages bandwidth and shows the route through the tor network that your requests make. kinda neat, but one of the issues i keep running into is the cookie based auth that it uses to attach to the instance of tor that is running.