Secondly, even though I don't think the underlying security concern has merit, if we add such a feature we can expect a lot of negative feedback from all kinds of parties including concerned users, web developers, device OEMs, enterprise customers and so on about how this allows people with physical access to the device to steal their password. We can explain all day long how such an attacker has many other ways to steal the password already -- many people are unlikely to be satisfied with this response. As a result, we'd have to respond to a lot of feedback at a minimum, and possibly would feel forced to provide web developer-facing, OEM-facing and enterprise-facing mechanisms to disable the feature.
It would help a lot in these discussions to be able to point to Edge as prior art, but I think there's still a lot of "iceberg" to this issue.