My problem is with the "email provider" part. In the real world, it just means Google, Yahoo, Microsoft, and handful of firms (like Rackspace) that provide hosted email solutions for a fee. You might call it "decentralized", but I'd call it "mostly centralized".

Eh, so what? The only thing your provider knows is that you're trying to authenticate somewhere, but not where. It's hardly bad.

It's still way, way better than "Log in with Facebook" and has the potential to get even better over time.

Of course it is, but it still ain't anything close to optimal.