The problem is that this does pretend it is "already fixed": the attitude that we have legal mechanisms in place to try to make "users do this thing that will never ever ever actually be secure" somehow legally protected means that people think it should be ok and keep doing it.

I mean, seriously: why would the law make it so illegal to allow passwords to be dumped, with technical people coming out saying "these passwords might protect something really important as the user is using the same password on more than one thing", if that wasn't at all how you were supposed to use passwords?

Imagine if the opposite were the case: if banks were not liable for any money lost by a user if it could be shown that the user was using their banking password for any other service. That would be a very different conceptualization of the risks and how passwords work, and frankly "fits reality" better than what people seem to want out of this situation (which is the exact opposite of that) :(.

If you don't want to claim that the issue is "already fixed" by "a bunch of websites that know what they are doing hash passwords and hopefully never have code bugs or people tapping their web servers or employees who can modify the code or debug logs that dump POST requests accessible to anyone or any other number of ways this password could be leaked because you sent it to this company's web server (which quite often might have used some SSL termination from some third party and so who knows how many people have access to your password!)", we might come up with actual solutions (or maybe spend the effort to educate users, as right now I don't know anyone who really tries).