Lately someone ask me why application need to have "Your data on all websites" permission.
Extensions with internet address permission can actually read Your data on this websites (have access to cookies and session for this addresses). That's the reason why You have notify about accessing Your data on all website.
Fortunately you can read source code of whole application at http://code.google.com/p/chrome-rest-client/source/browse/ and see that this application do not interfere with any Your data on any website. There is no other way to make it work and do not give this permission (and not to use external server). On the part of application You do not need to worry about Your privacy. As long the source code is public You always can check what this application actually can do.