I remember in Poland and I think the Czech Republic they actually hold your passport

Not in the Czech Republic. I've worked in Prague for a year in 2006 and have stayed in lots of hotels through that time. I'm still visiting the city 10 - 12 times a year and usually stay in hotels.

They normally want to see your passport, or id upon check-in, but I never, ever experienced that they kept it after the check-in process.

Countries where I experienced this where mostly in Asia. Like Laos, or Cambodia. Not even in Vietnam they kept my passport after checking in.