This is true, however I can't help but feel that the design of the system encourages users to choose a low entropy master password and get a false sense of security seeing a different "strong" password can be produced for every account. The fact that the master password has to be typed frequently to recover the derived passwords adds to the problem.

This is the exact same problem with brain wallets, for which people delude themselves into thinking that they have managed to conjure a secret phrase that only they will know, only to get hacked in no time because the passphrase they came up with was just bad and they could not tell.

I agree with you.