Password entry: are “paste from password manager” and “eyeball to view passwords” mutually-exclusive features?



Context

NIST SP 800-63b gives the following guidance for password forms (aka login pages):

Verifiers SHOULD permit claimants to use “paste” functionality when entering a memorized secret. This facilitates the use of password managers, which are widely used and in many cases increase the likelihood that users will choose stronger memorized secrets.

In order to assist the claimant in successfully entering a memorized secret, the verifier SHOULD offer an option to display the secret — rather than a series of dots or asterisks — until it is entered. This allows the claimant to verify their entry if they are in a location where their screen is unlikely to be observed. The verifier MAY also permit the user’s device to display individual entered characters for a short time after each character is typed to verify correct entry. This is particularly applicable on mobile devices.

I had the argument made to me that these two features should not be implemented together because they would allow a user to circumvent a password manager’s protection and view the auto-populated password. I suspect this argument won’t hold water, but I’m curious about community opinions.