I've been a huge fan of you for years, I've read almost everything you've written online a couple times over, and I'm asking you to please stop listening to Jakob Nielsen. Please.
The most fundamental kernel of usability is "does what I expect", and everybody expects password masking everywhere. Everybody expects to type their password twice to register and once to login (the only fundamental distinction!). Everybody is extraordinarily habituated to typing their passwords blind, it's of absolutely no use to display them.
Really, the minimum result you get is that people take longer to sign up because they pause to be infuriated at your design decision.
Don't try to redefine a fundamental UI component that has a universally consistent implementation and is totally orthogonal to the innovative bits of your app. Seriously, stop being an asshole and always use <input type=password> for user-chosen secrets.
Aaand that is one sentence I thought I'd never get to utter. Seriously though, pinboard is great too, and closer to the functionality of delicious. It's mostly a matter of preference.
Sorry, after seeing this I didn't sign up. Might seem petty and I realize that the plain text field is sent the same as a password field, but at least maybe change the sign up page to use your secure site by default. Doesn't look like you had a bad day of business though.
This also prevents the pwdhash plugin I have installed from working. I agree with the other commenters - this is a bad design decision. Don't make things inconsistent and arbitrary, please.
