I think that it would be cool to have an improved password protection system on WordPress.
I would like to see a user registration moderation feature (so that users would not immediately be sent a password after registration, but rather an administrator would have the option of adding the user).
Much work has already been accomplished! See
http://wordpress.org/support/topic/58132/page/2?replies=37
Thanks!
P.S.
This (link below) offers a great password protection system for site entry. It protects your entire blog - including feeds. (not images, though) It might interface well with the idea above - please leave comments.
http://blog.taragana.com/index.php/archive/angsumans-authenticated-wordpress-plugin-password-protection-for-your-wordpress-blog/