One thought that I have: would there be an issue sending this file in an unsecure context where MITM is a possibility? Alice sends Bob her HTML file over an unsecured medium, and Jane intercepts this traffic, and gives Bob a modified HTML file that will report the password back to Jane. Jane can set it up so that the browser still displays the local file as it's source, but has an HTTP request in the background phone home back to Jane's server.
My scenario only works if Bob doesn't inspect the page source before entering their password, or if the modifications are sufficiently obfuscated.