Storing your passwords locally without a master-password to protect them is never secure. For example in Firefox or IE, when you let them store your login data, those infos can easily be retrieved again by potential malware. So "encrypting" that stuff really only gives you a false sense of security.
It's always a false sense of security, isn't it? I mean, the Department of Defense invests millions in securing its systems and they still get hacked. Any computer system hooked up to the internet is insecure, plagued by a false sense of security.
That being said, there are still degrees of security. Would the DoD ice always protect me 100%? No. But I'd still love to have it.
Will encrypting my Demigod passwords protect me from a moderately experienced and dedicated intruder? No. But I'd still love to have it. For example, it would keep an amateur like my nephew from visiting and pulling up my password. He wouldn't know how to reverse a hash but he can open a file in notepad.
Hashing a password is a low-effort activity that would protect me from casual intruders. It's a basic, standard practice that Demigod should follow.