[falsedan]

You've just described a physical token duplication attack. A consumer phone certainly is easier to attack than a SecurID or smartcard, but it's a far sight from a really really long password. For starters, the challenge response is calculated by the phone's hardware, so that the private key is not exposed.

The "what you know"-type authentication is literally what you know, not "I don't know it but it's written down on my phone, hang on a sec". You're supposed to be able to provide it without reference to notes (or Post-Its stuck to the bottom of keyboards).