Confirmed in Feisty/Edgy.
A safety workaround is to switch early to console 1 (ctrl-alt-f1), just when
the keyboard is initialized: then the password won't get displayed.
** Changed in: usplash (Ubuntu Feisty)
Status: New => Confirmed
** Changed in: usplash (Ubuntu)
Status: Confirmed => Fix Released
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[edgy] usplash prevents passwords from being not echoed on the console
https://bugs.launchpad.net/bugs/55159
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