Passwords usually aren't sent letter-by-letter as far as I'm aware. Although that's mostly because doing so would make the server side much more complicated than it needs to be.

These sort of attacks are very interesting though. Information introduces all sorts of regularities into the environment and as long as they aren't big enough to disrupt functionality most people never even think about them... For that matter, people seem to have a general problem with thinking about "outside-the-box applications" (probably not the best way to phrase that).

The attack is for when you get a password prompt on the other end, like for su, sudo, or logging into another machine. The password for the original connection is sent as one packet, but the other passwords are normal keystrokes.

Well, in TCP anyway. LAT was a line-oriented protocol. This is why back in the day VMS boxes could support so many more users than Unix boxes - the host didn't have to process every keypress and the network didn't have to send a packet for it, if you were dealing in complete lines. The flipside obv is that VMS needed (very) slightly smarter dumb terminals.

Ah, my mistake. Interesting, thanks!