After reading the liaison comments, I found this which says liaison between pouvez and aller here is optional (type II): http://french.about.com/library/pronunciation/bl-liaisons-o.htm
As an English speaker, "may I...?" and "can I...?" do not carry the same meaning. Subtle, but true. May conveys the sense of "am I allowed to...?" whereas Can conveys the sense of "am I able to...?" So I do see your point in saying that they are "virtually" interchangeable, but I feel that "virtually" might be going a bit far.
That's because "où" has different functions. It means "where" as an interrogative word or a relative pronoun. It can also mean "when" but only as a relative pronoun.
- Où allez-vous ? = Where are you going? (interrogative)
- C'est la ville où j'habite. = This is the city where I live. (relative pronoun - where)
- C'est la moment où je me suis échappé. = That is the moment when I escaped. → (relative pronoun - when)
In the sentence "You can go when you want", you can use "quand", but not "où".
Please understand that the Duolingo hints gives definitions of words used throughout the whole course. Just like using a dictionary, you must choose the appropriate meaning for the particular situation.