I added defaultPassword support if someone wants to initialize the password field with a default value.
use :

JS code

(function(){
$j.fn.myPass = function(options) {

var defaults = {
charReplace : ‘%u25CF’,
charDuration : 1000
}

var opts = $j.extend(defaults, options);
var aktiv = null;

$j(this).each(function(){
tempField = $j(this).attr(‘name’);
$j(this).attr(‘name’,'tmp_’+tempField);
var defaultPassword = $j(this).val();
var hiddenPass = “”;
if(defaultPassword != ”) {
for (i=0; i<=defaultPassword.length-1; ++i){
hiddenPass = hiddenPass + unescape(opts.charReplace);
}
}
$j(this).val(hiddenPass);
$j(this).parent().append('’);
});

$j(this).bind(“keypress”, function(evt) {
clearTimeout(aktiv);
var hiddenPass = ”;
var currentValue = $j(this).val();
if(currentValue.length > 0){
if(evt.which == 8){
deleteLast(this);
}else{
currentValue = currentValue + $j(this).val().slice($j(this).val().length – 1);
for (i=0; i<=$j(this).val().length-1; ++i){
hiddenPass = hiddenPass + unescape(opts.charReplace);
}
lastLetter = $j(this).val().charAt($j(this).val().length-1);
if(lastLetter != unescape(opts.charReplace)){
saveString(lastLetter,this);
}
$j(this).val(hiddenPass);
aktiv = setTimeout("hideAll('" + $j(this).attr('name') + "')", opts.charDuration);
}
}else{
currentValue = $j(this).val();
var tempField = $j(this).attr('name');
var hiddenID = tempField.substr(tempField.indexOf('_')+1);
$j('#'+hiddenID).val('');
}

});

hideAll = function(el){
lastLetter = $j('input[name='+el+']').val().charAt($j('input[name='+el+']').val().length-1);
var hiddenID = el.substr(el.indexOf('_')+1);
var tmpstr = $j('#'+hiddenID).val();
$j('#'+hiddenID).val(tmpstr + lastLetter);

var hiddenPass = '';
for (i=0; i<=$j('input[name='+el+']').val().length-1; ++i){
hiddenPass = hiddenPass + unescape(opts.charReplace);
}

$j('input[name='+el+']').val(hiddenPass);
}

saveString = function(str,el){
var tempField = $j(el).attr('name');
var hiddenID = tempField.substr(tempField.indexOf('_')+1);

var tmpstr = $j('#'+hiddenID).val();
$j('#'+hiddenID).val(tmpstr + str);
}

deleteLast = function(el){
var tempField = $j(el).attr('name');
var hiddenID = tempField.substr(tempField.indexOf('_')+1);
var tmpstr = $j('#'+hiddenID).val();
var length = $j('#'+hiddenID).val().length;
$j('#'+hiddenID).val(tmpstr.substring(0,length-1));
}

};

})();

Enjoy !!

You can clone an input[type=password] to be able to retrieve its value, something like that: http://fr.pastebin.ca/1474004