Any hack that allows you to see a users password shows poor character on the admins part. It's thieft and invasion of privacy. If you put up a sign that said your password is not private and may be collected by the admin of this site I'm sure your site would be dead. Collecting passwords from failed mod/admin login attempts is the same. You do not need the password tried to complete your investigation. In the context that xenon put it - "but you know, it could be a way for you to gain pw's, too as a little spelling error can show you the pw of your mods" - it's purely thieft.
I'm shocked at these actions!
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