I get prompted to install Titanium SDK as required in my dev eclipse. In that workspace I had a bad path to Titanium SDK root somehow, so I was getting prompted to install the SDk as required since no SDks were detected. I was unable to get rid of the update dialog to fix my SDK path setting (and some other bug around the sudo prompt was occurring, so I couldn't even install). In effect I had to restart and then quickly set my Titanium SDK path in preferences before the dialog popped up.
I think if there's a non-null Titanium SDK path in the user's prefs and it's not pointing at a valid SDK location, we may want to make the Titanium SDK install not be required. I'm not sure how often this happens in "the real world", but when it happened it was a very bad experience.