Well, for one, this was kind of a sarcastic comment.
Second, if I really did this, once the interviewee refuses to give out the password I would congratulate them, saying they passed my test of modern technological common sense: "never EVER give out your password to anyone for any reason".
Oddly, I don't find this idea too offensive, especially since so many companies have large security holes via social engineering. If the applicants are this lackadaisical in keeping their own data private, why would I trust them with the company's or my customer's sensitive information?
With that said, I definitely understand why an applicant would be offended by the question. In fact, I would hope they are! I guess the second test is seeing if they understand the logic of such a question then convincing him or her that I don't conduct myself this way.
In the right hands, this is a great tool, but in the wrong hands, it is a disaster.
In my case it would still backfire. I wouldn't know what the response would be if I _had_ given them the password. It would make me think the person hiring me was being manipulative and dishonest. And that is a best-case scenario.
Secondly, it would be setting the bar way too low. I don't appreciate being congratulated for not being an idiot. Someone congratulating me and actually being impressed of that fact makes me think less of that person.
A pretty bad start to a supposedly long relationship, if you ask me.