Ok lets compare these approaches rationally, especially from a user perspective. If you let the service provider choose/generate the password it might as well generate your keys for you, there really isn't much of a difference. From a credential management perspective there really isn't a difference either between a long non-human readable password and a long non-human readable private key. They basically suffer from the same problem, neither can be used without access to the credential manager. The only "advantage" passwords in that scenario have is that you don't need to sign anything you can just send it to the relying party however when you rely on password managers to input your credentials anyway that manager can manage signing as well right. I'm not advocating to use PKI instead of passwords just that forcing the use of password managers through very complicated long forced passwords has in my opinion not much of an advantage over PKI when both are equally opaque for casual users.