Don't you think that this element would make an awesome replacement for text passwords? That's the first thing that came to mind when I was reading the doc (linked above).
What do you think about this idea?
With a huge pallet of pre-defined colors, and/or a text field for the hex color, with a small canvas about 25px square (5x5), the number of possible passwords is far greater than a 25 character text password.
Oh, Security on over-the-shoulder-looking:
The square could use a white bg (meaning there is no color in that pixel or it is white) and every color you place is rendered as grayish in the square.
I don't know if there is option to do this built in, but maybe you could place the "real one" in a hidden div that reflects what you actually draw in. etc etc
HTML 5 isn't due to be finished until 10 years after the world ends but I think I'll definitely develop this, at least as an option, when it's ready.