Why are liquids deemed hazardous in airport security?
It is in part due to the 2006 transatlantic aircraft plot, a plan to use explosives disguised as soft drinks to bring down a series of airplanes. As for how they chose the 3 oz. 1 Liter bag rule: 


  In an interview, Mr. Hawley explained that security officials in the
  United States, Britain and elsewhere quickly determined that the
  liquids explosion plot was “chillingly real.”
  
  In August 2006, the thwarted terrorists were planning to use “a
  formulation that was specifically put together to get around our
  screening measures,” 
  
  ...
  
  Tests showed that a container of a certain size is needed for an
  effective explosion. Separate three-ounce containers limited in number
  to what will fit inside a single one-quart bag do not have “enough
  critical diameter” to blow up an aircraft, he said.


This is similar to why you also now need to put your shoes through the X-Ray Machine.