I suppose it depends on the nature of your site. With something like tek-tips, I guess the passwords can be sent in clear text because a breach wouldn't be the end of the world.
But if, say, you were remembering clients' credit card details and letting the client access it via a login, you certainly wouldn't want the password sent as clear text.
As for an Iframe, it is an IE5+ specific object(although I think its supposed to work in NS6)
It behaves like a frame, Javascript treats it just like a frame and it becomes part of the document.frame DOM array. However, it can be embedded wherever you like and so doesn't have the limitations of traditional frames.
(IFRAME = Inline Frame)
IMO you will need to use either frames or layers if you want to place a small, totally secure login on an otherwise unsecure page.
You could sidestep this by having a link to a login popup instead.
A good example of an IFRAME is my site,
where I built the whole site around it. You'll need IE5+, though. Mixed Linux/Win2000 Network Administrator