Atwood's solution is flawed because law enforcement only need to give correctly formed documents to Google to get all your passwords over a bunch of services.

Imagine someone using Hushmail in the same way. It should be a lot more secure. Hushmail uses strong encryption, but has in the past served specially crafted Java applications to the customer because they were cooperating with law enforcement.

Admittedly, if you have law enforcement after you then you need to start being a lot more careful with everything.