You can do it in a webviewer, but a custom dialog is much easier and native.
Keystroke triggers are not recommended for WebDirect as they can result in dropped characters from the user typing faster than the server can process and redraw the field.
One alternative would be having an onObjectExit trigger that masks the password when the field is exited. This would simulate password fields that display a password during entry, but mask it for when the field is inactive.
Set the font of the field to Zapf, Marlett or Apple Braille. (Does not produce dots)
The old font Password would give you exactly what you want, but I can't find it.
Note that this method is not always compatible with all users. People that use forced fonts or don't have that font will see it in plain text.
I thought about making a font with only bullets, but came to the same conclusion; it would not work on someone else's computer. Zapf and apple Braille should be on all Macs. Wingdings would be on all Windows & Macs. Dealing with forced fonts could be a problem and I had not thought of that.