>If one use good email client/browser, locally stored passwords are not a > problem as they are encrypted
Unless you are sending an encrypted password to your mail server (in which case, the compromiser still has the necessary to log into your email account) then this has to be decrypted some how by the email application. Again, if you're not entering anything to decrypt this then that means the necessary information to decrypt the encrypted stored password is on the system in some manner.
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