This is a little idea for a module maybe for a hackathon or something. Magento includes passwords in plain text in registration emails by default. In some cases you can just suppress the password, but in other cases you can't - for example if you have customer service reps creating accounts over the phone that need to generate password and send them to customers.
So - how about integrating with readthenburn.com to send email passwords, or perhaps generating temporary password that expire after a day or two, requiring them to use the forgot password if they didn't login by that time.