I'm not sure, but in my opinion the "no, never" would not make much sense from a security standpoint.
Let's look at a "non-malicious" use case first:
If for example you have an app that has a "find the next gas station" button, and the prompt is triggered by that.
Would a "no, never" make sense in that context? After all, when I don't want the App to know where I am, why would I press the "find the next gas station" button in the first place?
Then lets look at a "malicious" app case:
If the App randomly wants access to your location for no apparent reason, my personal opinion is that the "never" button will just hide the fact that the malicious app is trying to access his location all the time. If the user gets the popup every 5 minutes he will probably decide "this App is crap" and uninstall it. If the malicious location-lookup is just silently ignored then the user might keep using the app, and who knows what other malicious tricks it's also trying.
My personal "favourite" solution would be to just have the yes/no option in the simple OS prompt, and have the "yes, all the time" "no, never" options only in the OS administration interface for the app, but there with additional options to log/analyse the request that are made. So that the user isn't tempted to just klick "yes, all the time" for every app that is installed.