I don't think it is the end of the world, I think it is more about expectations. I haven't seen the screen in question but I would probably be fine with it as long as it had a warning that the password would be displayed.
Suppose I am installing a virtual machine while sitting in a shared space or while sharing my screen on a projector. I go type that password in with the expectation it would be hidden and next thing you know, everyone knows my password.
I suppose you could say I'm a bad person for using my login password on my virtual machine's install, but I want something easy to remember. It could very easily be something else but the point is, I didn't expect to be showing that password to anyone, even with others viewing my screen.