HTML

<form>
 <p>
  <label for="password">Password:</label>
  <input id="password" name="password" type="password" />
 </p>
 <p>
  <input id="showcharacters" name="showcharacters" type="checkbox" />
  <label>Show characters</label>
 </p>
</form>

Javascript/Jquery

<![CDATA[
$(document).ready(function() {
$('#showcharacters').click(function() {
  if ($(this).attr('checked')) {
   $('#password').replaceWith('<input id="password" name="password" type="text" value="' + $('#password').attr('value') + '" />');
  } else {
   $('#password').replaceWith('<input id="password" name="password" type="password" value="' + $('#password').attr('value') + '" />');
  }
 });
});
]]>