Doesn't exactly protect you from people looking over your shoulder though.
If you wanted to try and avoid that, you could build the keypad out of 1x1fs and make the buttons not blink when pressed. Or you could provide a handy smoke grenade spawn right next to it. Or just weapons, if damage is enabled. There's really not much else I can do about that though.
The point isn't really for them to have the same purpose as real world keypads: "allow in only a specific set of people". In reality, the possibility of people spying on the password, or slipping through the door by following someone who does have the code, or sharing it with someone untrustworthy, are all unfortunate weaknesses in the system that people tolerate due to cost and/or convenience. In Blockland, you can already achieve that goal in an even more secure way, with things like variable events that check for BLIDs. The point of using keypad events, then, would be to deliberately introduce the same weaknesses as the real world keypad, to add to the gameplay experience in some way. The security of the add-on is just there to prevent an additional weakness introduced by Blockland's events system, which could be considered using meta-game knowledge.
So yeah, "It's a feature".