The trick of entering a dummy username and password, which is then modified in the post request sounds a whole lot better than playing clipboard roulette or messing with the DOM.
Actually, the more I think about it, I don't think I want this extension to do that...how does it know how long between when the fake fields are entered and when I press submit? Now I am going to read the paper...
Edit: Yup, the extension intercepts all network traffic even before you click submit. If you, e.g., hash on the client side this password manager will break. If you never click submit, this extension will continue to read all HTTP bytes from the page going back to the server it seems, looking for some strings...not sure the perf implications of this.