Wouldn't you want to maybe... encrypt that file? Seems almost circular unless you use something like stenography to embed the data somewhere. I'm not personally too thrilled by a counter file to replace a different file, at that point I feel like I'm losing features.

Yeah, but then you need to carry the file with you, opening it (especially on mobile) is super clunky, and when you get to a site that doesn't support numbers/letters/whatever that the generator uses, it's hell. I used to use that, but I switched to KeePass2 and it's much better.