Yes, it's most annoying. It should probably warn
against using an important
password.
It does. The subscription form says:
"You may enter a privacy password below. This provides only mild
security, but should prevent others from messing with your
subscription. Do not use a valuable password as it will occasionally
be emailed back to you in cleartext."
You can turn off the password reminder in your preferences at
<http://mail.wikipedia.org/mailman/options/wikimediauk-l> to prevent
the monthly reminder.
Angela.