If someone has enough access to a computer to install a keylogger, they probably have more than enough access to just read whatever is being "typed" using the on screen keyboards. Inject javascript, read it out of the browsers memory, whatever.

Of course you could be using such a system to defend against a hardware keylogger, in which case I'd be thinking long and hard, trying to decide who I pissed off.

Edit: Just realised you /were/ referring to a hardware keylogger. My apologies.

Yup, I assume that's the idea. I can't imagine many consumer banking accounts are hacked via hardware keylogger though. Presumably if you have physical access to a computer, you can usually install software on it anyway. A well positioned webcam could probably see what you're clicking on with the onscreen password prompt as well.