How is the security of Mastercoin different than that of Bitcoin? Mastercoin is based on Bitcoin, and has a very similar security model. However various parameters make the security different (some better, some maybe worse).

How exactly do they differ, security wise?
Mastercoin Founder here.

Mastercoin inherits its security model from bitcoin, with some minor changes. To undo a Mastercoin transaction, you'd have to undo the bitcoin transactions containing the Mastercoin transaction data, so we have almost as much security as bitcoin itself. I say "almost" because the order of Mastercoin transactions in a bitcoin block matters, and a block-chain reorg can affect that ordering, because bitcoin miners don't pre-validate mastercoin transactions before including them in a block (bitcoin transactions must be valid before they will be included by a miner). Consequently, in the event of a blockchain reordering event, a Mastercoin transaction which was previously invalid can become valid due to reordering.

The end result is that a Mastercoin transaction with 3 confirmations is less secure than a bitcoin transaction with 3 confirmations, but more secure than a bitcoin transaction with 2 confirmations. I typically say that Mastercoin transactions are "half a confirmation less secure" than bitcoin transactions against double-spend attacks.

In the future, Mastercoin will be MORE secure than bitcoin - specifically against theft and loss. Mastercoin features include the ability to put restrictions on a "savings" address such as temporary reversibility and spending limits. These limits directly prevent theft, and indirectly prevent loss (since it is safer to have more backups of a wallet which can't be stolen).