I think it depends of the sensitivity of the material in the website. e.g. I would never do this for a financial service website, just in case I get sued later. If your website doesn't require https for logins, then unmasking the password at registration time is the least of your worries.
It should nonetheless be noted that many browsers cache values entered in non-password fields, so if someone is using a shared computer to register, the next person might only have to double-click on the non-hidden password field to see a list of previously entered passwords. Not so good.
Does the value in a field that gets toggled between password and plaintext get cached when the field is a password at the time the form is submitted? We could always ensure the field was in password mode at that instant.
It should nonetheless be noted that many browsers cache values entered in non-password fields, so if someone is using a shared computer to register, the next person might only have to double-click on the non-hidden password field to see a list of previously entered passwords. Not so good.