Preening is in the dictionary. It must not have been on the board. The game currently uses the first letter it can find starting from the center and working out. Part of the strategy is working within that constraint, but I agree that perhaps just letting you click to build up words would be better.
My original expectation was that it would be a fast-paced game with focus on multiplayer where entering words with the mouse would not be feasible. But most people play single player and like to take their time and come up with high scoring words, so more letter control is more useful.
Sorry about the confusion. This isn't the right version of the game, it got uploaded under the wrong account. Please play this version:
http://www.kongregate.com/games/samskivert/dictionary-attack