A special MySQL user account used by init script to perform certain administrative task.
Where is the login details being stored?
And the file is readable by root user only.
$ sudo ls -ld /etc/mysql/debian.cnf -rw------- 1 root root 333 2011-03-19 20:35 /etc/mysql/debian.cnf
Can I remove this account?
You cannot remove this MySQL user from the database otherwise the mysql server will not start.
Can this account be used for other purpose?
Yes and you can use this account login details as a backup user instead of creating another mysql account. Example
$ sudo mysqldump --defaults-file=/etc/mysql/debian.cnf mysql > /tmp/mysql.sql