Here's another etymological explanation to add to the mix, from a fascinating website for all lovers of word origins:
Take Our Word For It
http://www.takeourword.com/Issue006.html

From Lawrence Lutman:

What is the derivation of shortening as in shortening bread and what does it have to do with short?

Shortening has nothing to do with short as most of us know it. Instead, there's another word short which describes something which is easily crumbled or brittle. This word short, as in the terms short iron and cold short (both of which refer to brittle iron), comes from a Germanic source, the latter being a corruption of Norwegian and Danish kuldsjær "coldshort" which, in Swedish, is kallskor. Skor means "timid", in the sense that anything which is crumbly or brittle is not strong but is timid. So, ultimately, shortening is an ingredient (usually butter or another fat) which makes baked goods timid! And I wonder if the Hershey candy-bar-naming committee had that in mind when they chose the name Skor for one of their buttery, slightly crumbly treats. By the way, shortening was first recorded in about 1823.