Actually I wouldn't be all that happy with my password sitting around on the server for an entire second. In computer time, for want of a better phrase, a second is actually quite a long time. Perhaps switch to 'the instantwe receive it it gets encrypted'.
Having said that I agree you don't really need it on the start page.
This is cool, but the login page isn't https (which will confuse the noobs) and I don't think a paragraph on security is needed. Maybe just some sort of 'lock' graphic and 1 sentence explaining your privacy measures with a link to an expanded description for the paranoid/curious.