The post itself acknowledges that are certain instances where you need the higher level of security afforded by password masking, such as when you are using a shared computer (eg, at an internet cafe), and certain functions high risk applications (eg, banking). I would argue that this need goes even further.

Even if you not using a shared computer, say you’re using your own computer at the office, if you’re showing a colleague something on your computer (in person, or even via some kind of desktop sharing application), do you really want your passwords unmasked visible to everyone?

You might argue that only passwords you type should be unmasked, and other should stay masked, that might a solution. However, with some many exceptions now in places, the user will be more confused and frustrated than if you have just left the passwords masked in all cases.

If I were to make a change to the way passwords are handle, I would opt for the Apple approach on the IPhone and IPod Touch. As you type passwords, the last character you type is show unmasked and is masked when you type more, which solves the issues raised by the post. This could easily be ported to desktop applications.