I actually think this is an awesome idea. I'd just make a couple of small changes though. Instead of using space to start entering your password, I'd use the T

I actually think this is an awesome idea. I'd just make a couple of small changes though. Instead of using space to start entering your password, I'd use the TAB key (as people are familiar with it). Then, to make it more obvious to the user the separation (and protection) of their password and user name, I'd put the password in a second text box and label it "password". The benefit of this approach is that I think users would be comfortable with it, it works with all modern browsers (without JS) and I think it will be a fairly easy to change our existing forms to suit.