You will need to write your own readPasswordChar() function since Keyboard.readChar() echos the typed key.
It will look something like this: (pseudo Jack)
function char readPasswordChar() {
// wait for key pressed
while ((key = Keyboard.keyPressed) = 0) {}
do Output.printChar(0); // print a blob
// wait for key released
return key;
}
You could be more sophisticated and write a readPasswordString(int maxSize) function that would allocate a String and read the typed keys into it.
--Mark