I usually find that password systems actually get people to at least read more closely through the rules, and I usually warn people that did get the correct password right if they break a rule later down the road.  Though I've only used this method on sites with more people that don't bother with reading the rules like over at Pokefarm Q.  I kid you not, when I was looking through various RP Set-Ups, one of the guys made an application for a Shiny Luxray when the rules stated only Unova Pokemon.  Seeing as there seems to be more experience people I probably won't use the password system as much.