The problem with this discussion is simply one of definition of security. For some, security is entirely black and white. It is either perfectly secure or it is not. These are the people who would say telnetd with authentication is worse/same as telnetd without any authentication. (False sense of security aside....really?)
On the other hand, there are people who believe in incremental security, or grey levels of security, where something like a password is at least somewhat better than none at all. Where *some* encryption is at least somewhat better than none at all. These people probably tend to be those who've actually had jobs in general digital defense... Unfortunately, one person's level of risk/value/security is not another's, especially if their definitions are never going to match up.
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