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What if you leave your computer unattended while typing in the password?
What if while in the middle of typing in your password, you minimize a window, and forget about it, just to restore the window in front of a co-worker?
Masking is a great thing, and anyone who says it should be unmasked either doesn't understand security or basically is hoping FOR it to make their lives of cracking easier.
Either way, masking isn't exactly "secure" either. The password is still being stored in plain text.
The best solution is to use SSL for login forms. However, masking is just an absolute necessity for the sake of eye-ball security.
Just because there are idiots out there who can't use a keyboard doesn't mean the rest of us should suffer.