Thats an interesting take. Yea i think the convenience of this and the catastrophe of missing the private key is quite alarming.
If your private key is leaked you are screwed, whereas with a leaked password you still have some leverage since there is a place for accountability.
Nostr has something called Bunker i havent gone in depth but its solves most of these challenges.
And your concern is valid, a real opportunity would be to look at how to make this Simple for everyday users who don’t mind having their keys stored safely