That's a lot of trouble to go into to have questionable security. Though it's admittedly really cool.

I guess this is only great if you have to use potentially compromised computers often, so you are risking leaking at most a single password at a time, but still...

Unlike a proper password manager this still has issues though; for one, saving in cleartext is just bad, reading EEPROMs is trivial, and (perhaps more importantly) unlike a normal password manager this doesn't protect you against inputting data on a wrong (phished) domain.