Homebrew installation requests to use my confidential keychain information. Should I allow it to do so?
My answer to question 2 ("Do I have to click 'Allow' for the installation to complete successfully? What will happen if I don't?") is - click "deny" and see what happens. The worst that could happen is that you'll have to reinstall Homebrew.

A wee bit of context from my experience in installing Homebrew: when I installed brew I didn't get this pop-up. However, after installing brew I set up a launchd job to brew update once an hour, and I ran into a daily limit which prevented hourly updates. Brew advised me the solution to this was to (a) create an account at Github, and (b) generate a token
for brew. My assumption is that you already have an account at Github, and that brew install is checking your keychain for a token. In my experience it's not needed for install, and you can generate a token later if you need one.