Also, yes: people can still choose crummy passwords. Personally, I don't think the appeal is in better security; it's convenience of single sign-on without it being tied to a. identity or b. Facebook (or twitter or google or whatever other service that harvests my data).
And the appeal that Mozilla is pushing is definitely better security (as well as a distributed security authentication versus one for-profit authority - I definitely trust Mozilla MUCH more than Facebook or twitter, but it's still a central authority). You can especially see this in the talk they gave introducing it: http://www.youtube.com/watch?v=iZBTc7iEkQY
Mozilla hosts a verifier as a convenience, but you don't have to use it.
You can try this yourself with a demo identity provider we have at http://eyedee.me/