This can't possibly be an unoticed bug. I've done something dumb surely.. like hit the "give everyone the password" option.
in 1.4.3.3, default theme, if I set a gallery password (with or without a user name) and if I do NOT enable the "User name" security option, then on my main front end login screen the password is displayed right under the login prompt, before anything is typed.
I have to wonder if something is leaking through that I see and others don't based on some php setting. I did turn off all the error reporting options.
If I knew how to post a screen shot I would, because it's pretty funny.
I probably will use user passwords anyway.