You're assuming your users will go to that place, see their passwords are showing and say to themselves, 'ok, this stuff isn't secure, I better be careful'. But

You're assuming your users will go to that place, see their passwords are showing and say to themselves, 'ok, this stuff isn't secure, I better be careful'. But that doesn't happen. People don't generally go there. They don't know about it. But someone else, using their computer, might know about it, or might stumble upon it. If you stop this happening, people aren't going to be lulled into a false sense of security, as you suggest. They aren't even going to know it happened. But their passwords will be more secure against casual discovery.