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Re:Announcing Duo’s two-factor authentication for Unix by r00fus on Wednesday April 20, 2011 @07:04PM (#2468762)
This is more than just 2-factor auth, it's out-of-band auth, which means that a MITM can't compromise without having your 2nd factor.

This is definitely awesome, but my remaining concern is, what happens if/when duosecurity.com is DOS'd or is otherwise down?

Re:Announcing Duo’s two-factor authentication for Unix by jonoberheide on Wednesday April 20, 2011 @07:58PM (#2468906)
Check out the login_duo(8) man page. You can specify a failmode configuration option to fail safe (allow access) or fail secure (deny access) if there is a connectivity loss between your servers and Duo's service.