The solution seems pretty cool. My biggest question centers on usability. When you imagine this scenario with one site, it seems simple enough, but if every place you wanted to log into on the 'Net needed a bookmarklet, you'd have a bookmarks file full of entries to allow you to log in. What a management headache.
Of course, if you're using OpenID and the only bookmarket you need is one for your OpenID site, then that's not such a big deal. So, scaling Ben's idea presupposes the existence and broad acceptance of a wide-area identity system like OpenID.