@centaurian: Oh, you mean a passwordless login *on the Kindle* via the aforementioned AjaxTerm?
In that case, if it currently does require the root password, err, yeah, sorry, since I don't use it, I can't say much more than what you already thought about
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I'd go with switching the root password, because tweaking usbnet to make dropbear allow passwordless logins over WiFi is a *very bad* idea
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Bear in mind, I haven't tried this: but why would you ssh to localhost in the first place? Doesn't AjaxTerm already drops you in a local root shell?