Zero Configuration Networking
169.254.0.0 Automatic Private IP Addressing (www.zeroconf.org)
The 169.254.0.0 is the windows Automatic Private IP Addressing(APIPA). If your computer cannot detect dhcp, you may want to try to disable this service in windows. You will get served the 169.254.~.~ address if dhcp is unsuccessful.
Zero Configuration Networking: 169.254.0.0 is a pseudo private class b that windows boxen default to if they can't find a dhcp server to use, it's all part of microsofts plan to get people that have know idea what they are doing to network their pc's.
Redhat Linux added this 'feature' in version 9. Look in the script file /etc/sysconfig/network-scripts/ifup for ip route replace 169.254.0.0/16 and a reference in /etc/sysconfig/network-scripts/network-functions-ipv6
Adding NOZEROCONF=yes to all ifcfg interfaces including ifcfg-lo will eliminate the unnecessary route.
To immediately remove the route type:
route del -net 169.254.0.0 netmask 255.255.0.0 gw 0.0.0.0 dev eth0