These guys did a very similar presentation on the project last weekend at FOSSCON, too [ http://fosscon.org/speakers ].
I think this is the kind of project that could use more eyes, and hands. Not just for the tech side, either - projects that have this kind of basic-underlying freedom philosophy, and are clearly seeking to enable distributed communication and computing are in everyone's interest, IMHO.

Passwords just *might* have more application than just for accessing your windows PC. Is your comment as naive as it sounds? Keeping a windows PC malware-free obviously IS harder than you suppose, being that there are plenty of people who are owned from the first time they use MSIE. Before you go and just say "well then they should be smarter", try to realize the real game being played. It's an awareness and tech-savvy arms race; Until someone can make a perfectly secure consumer machine, there will always be the sizeable gap between the ability of the Russian mob to infiltrate a PC, and the ability of the average person who has to use a PC just to fully interact with society, to keep it clean. So, you might be missing Bruce's point, but you're also missing a view of the problem any broader than what you see right in front of you.