Notice how traditional password managers don't have this problem at all. If a password leaks, it tells you absolutely nothing about the other passwords.
In other words, the security still hinges on the secret key, except you're not directly using the password Secr3tKey#website.example, but its hash. If everyone used this, the password strength would still be only dependent on the secret key strength, and wouldn't provide an easier avenue to a preimage (i.e. can't find the key otherwise than bruteforce; even though the explanation has some worrying confusion between hashing and encryption). Fairly straightforward, except some opsec concerns (e.g. "domain name lapses in a few years and Evil Operator starts logging the secret keys", or "site is unavailable for initial load, even though it does work offline afterwards")