My DD5 has done this since she started talking, I'm pretty sure she has some form of a photograpic memory and I think by repeating words , it's her way of memorizing.
I really think you are on to something b/c my DD (officially 28 mths today) does it all the time. Sometimes she repeats a loud and sometimes she mouths it but I get the feeling it has to do with memorization. I parallel it to songs for DD b/c for the most part her repeating relates to books and this is probably why she can recite a lot of the books we read to her. Yesterday it was 'The Little Red Hen', a book from my childhood. She picked it up and 'read' the book. The first two pages was verbatim.
I don't even think the mouthing of words is so OT as you would think.
