Hoping for competence is indeed flawed from both sides. I would hope users use distinct, random passwords for each site they visit and that developers store those passwords in a safe secure way. I also assume both sides won't listen to logic however :)

The reason I'm annoyed with this particularly is that larger sites are more likely targets due simply to their size. Larger sites generally have the developer resources to provide a good solution to the problem from their end but commonly don't.

This makes them look bad and means their users are left in more danger than before. No-one wins.