I tried poking around with the add-in, but couldn't quite determine whether the implementation could properly protect from replay attacks, most notably whether a copy of the xml file used and the matching old OTP would be enough to unlock a newer database file.
In theory you could guarantee the OTP going forward, but it would be impossible to protect going backward, which kind of kills the whole point.
What the hell happens if I lose the yubikey? Or indeed anything else that substitutes as the 2nd factor?
If instead you mean "browser-integrated" as in the default "remember my password", well, those are not what this paper discusses and are generally better, though they are still not as desirable as a standalone less-privileged manager.
The idea that the password manager should be separate is practically common sense. Browsers provide more surface are for attack. Browsers are made to share content and work with network data. Ideally, your password manager should never touch the network ever. It has no need to.