[alextgordon]

It also lacks what you might call 'forward secrecy'. If someone gets access to my master password and an old 1password backup, then they get all the passwords in the backup.

But with this, if someone gets access to my master password, they get access to recent passwords, and when I create new passwords they get access to those too. If I'm not aware that my master password has been compromised (why should I be?) then I'd be merrily creating new passwords that are compromised at the moment of their creation.

Don't roll your own crypto, kids.