I’ve been trying out one-time passwords (OTP) – and they work well. Not as hard as I thought it would be. I found several resources as well. The incomparable Dru Lavigne described one-time passwords (under FreeBSD) quite well, then went on to describe setting up PAM for OTP. The directions are transferable to Linux and others. Michele Baldessari had a stupendous description on setting up OTP under Ubuntu – and taking advantage of a OTP password calculator built into Gnome Terminal (who knew?).
There are also OTP calculators for X, for Palm Pilots, for MacOS X, and cross-platform using Java (and even on mobile phones using Java). However, generating passwords is intensive, so slower platforms will not be helpful (such as older Pilots and most mobile phones). Generating multiple strings of passwords and storing them in a safe place is still a valid way to store passwords.
I’ll go into more detail later about how I set up OpenSUSE to use OTP (simple really).