I don't see why asterisks should be a problem. If someone is able to see the asterisks on your screen he must stand behind or right next to you. So he would most likely be able to see your keyboard. And if he sees your keyboard, he wouldn't be interested in the length of the password since he would already know much more interesting information about the password (i.e. the raw "layout" of your password, if numbers are users, etc.). Also he would be able to determine the length by simply counting the 'clicks' on your keyboard.
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