With a touch screen keyboard, having passwords I am entering displayed hidden is more trouble than it's worth to me. Few applications like KeePassDroid allow you to disable this feature. Is there any way to disable this feature globally? Solutions that require root are perfectly fine.
Which version of Android and which phone are we talking about :D ?
On my HTC Desire running Android 4.0.4, in Settings -> Security -> Passwords, there is an option saying "Make passwords visible".
I don't use this but it might help you.