Those short numbers can be explained by the way that Market Makers make the market. MM's often sell short in order to offer an orderly market and then cover at a later point. It shows up on the short list but its not really a short.
As I have said there are basically only two types of people(there are actually three) in the market that can short. Note holders who can cover a short position (and are able to provide proof to brokers) and market makers which are allowed to short in order to provide a stable market. The third is anyone with deep enough pockets to pay the $2.50 per share to short the market (which has been excluded due to the fact that most people in the penny market are never go to do that).