"twelve words can be hidden effectively in eg two separate emails"
Good idea to avoid the potential problems storing info in a physical location could lead to, like losing access.
You can lose access to an email too, so you gotta use at least two services.  You need redundancy in case something happens.  A company can lose data or go out of business.
I think I would feel funny storing my passphrase in plain text, even only half of it.  Of course, further precautions like encrypting it also leave open possibilities for losing access, for instance by forgetting your password.  Maybe use a mnemonic instead of encryption, if your mind works that way.  The best solution for one person might not be the best solution for somebody else. 

According to the "FAQ: wallet" the backup is encrypted.  It doesn't tell what encryption they use.  
The "FAQ: technical" doesn't mention the backup encryption.

The U.S. has balkanized money transmitter laws.  Operating legally in the U.S. imposes the same regulatory burden as operating legally in fifty different countries.
We need a single federal money transmitter license, not many State licenses.
We don't need NYDFS coming in and offering to help.  We need all fifty states, including NY, to get together and find a way to clear a path for bitcoin startups to grow. NY will help bitcoin only if it takes the lead and sets an example by getting out of the way.  As it stands, regulations which New York already has prevent companies like Kraken from operating here.  A company like Coinbase operates at significant risk -- risk from the State, not money launderers or thieves.
Promulgating further regulation on the State level is useless.  After New York, there is a line of forty-nine more states coming right behind, with their own regulatory bodies.  
The best thing anybody could do is just lock Lawsky in the bathroom until we make it legal for companies to buy and sell bitcoin in this country without fifty money transmitter licenses.

In outline:
When making a paper wallet, you generate a private key and address (and print them out).  Then you communicate that info to the block chain by sending btc into the address.
If you don't send money to the address, the blockchain will never even know you made and printed out a paper wallet.  For all practical purposes, the wallet/address you generated doesn't exist until you put money in it.
But of course,  you are going to put money in it.  That's when the magic happens.

It only takes 44 characters in base58 to encode 256 bits, so why do private keys have 50 characters?

Check out the University of Tsukuba's vpn project.
http://www.vpngate.net/en/

Exactamundo.
He didn't even have any idea what she was talking about.
His denial was the kind of thing somebody would say without a thought.
He was trying to get her to leave him alone.
That man is just a schlub, doesn't know what hit him.

The real Satoshi Nakamoto  
How does anybody believe shit like this?
I have one friend who believes the U.S. government demolished the World Trade Center.
Another friend thinks all the Jews in the towers were forewarned and escaped.
Another friend believes evolution is bunkum and says in a very emphatic voice, "A monkey cannot give birth to a man."
Which is true, as far as it goes.

how about using vpn or tor?

from a three-month-old reddit post
"The one state confirmed to already be supported is South Carolina. They suggest that U.S. users who really want to trade USD register an LLC in south carolina, and sign up under the LLC."
from:  http://www.reddit.com/r/Bitcoin/comments/1rztum/release_the_kraken_part_2/
Which kind of indicates that as of December the vast majority of U.S. residents still could not do any exchanging in and out of fiat.
This link
http://bitcoin.stackexchange.com/questions/19324/what-states-is-kraken-doing-business-in
shows Kraken is a registered MSB in every State, but that's not the same as being licensed.
So it looks like a slow road for Kraken and its U.S. customers.

I think CA and NY reside in the "no" column too.
Here's some links to check out on the subject of money transmitter licenses
http://mortgage.nationwidelicensingsystem.org/slr/Pages/default.aspx
http://moneytransmitterlicense.blogspot.com/2010/01/money-transmitter-license-information.html

State-specific info welcome.
Edit:  are there any Vermonters? 

If you're a U.S. resident, Kraken will not tell you whether they operate in the State you live in.  You just have to go ahead and attempt to register; if they don't have licensure in your State, you're S.O.L.
Therefore, dear readers:
A) If you are registered with Kraken in the United States, please make a post in this thread and tell us what State you live in.
B) Others, who have been unable to register with Kraken because Kraken doesn't have licensure in your State, please post that information too.

Now, let's maintain lists of the States Kraken does and does not operate in, and keep them updated.

My friend,
You are here reading lots of posts from people who daytrade.
Ignore all this moment-by-moment chatter and angst.
You are zen.  You do not try to time the market.  You do not succumb to illusion.
You have bought at various times and at various prices.
What you bought at is irrelevant.  None of that matters now -- your decisions bear on the future.
What, you can't wait six months or a year to make a fat profit?  You'd rather throw it all away and sell now?

The whole idea is to avoid transmitting dollars (or any other national currency) across international borders.

Thanks for the relevant and helpful reply.
Apparently for the near future one has to continue including a 0.1 mBTC fee per kb in transactions.  How long until at least half the nodes run v0.9, do you think?

well, if by that you mean miners will never willingly go below .0001 btc per kilobyte, then  we will end up having some extremely expensive transactions... presuming btc continues to appreciate exponentially at anything like its historical rate.
Anyway, here's a link to a github discussion
https://github.com/bitcoin/bitcoin/pull/3305

Supposedly the transaction fee will be cut by a factor of ten.  But when?

Coinchilli--
   Your website has a tab with social media buttons sitting on top of the text.  How am I supposed to read your article?

blockchain.info, not blockchain
and from what little I know, it sounds like a bit of a kluge

I placed a limit order through the Coinbase Trader app.
More often than not, my tablet is in my pocket asleep.
Can Coinbase Trader execute under those conditions?

The randomness ("entropy") of one word, chosen at random from a list of 1600, is simply 1600, and the number of bits in 1600 is 10.644 because 2^10.644=1600.  So in a string of words chosen at random from a list of 1600, each word contributes 10.644 bits of randomness (entropy).  To get 128 bits of entropy you need 128/10.644=12 words.  1600 is a pretty short list, which is why electrum makes such long seeds.
Diceware uses a longer list of 7776 words.  Log2 (7776)=12.925;  128/12.925=9.9.  10 words in diceware would give 129 bits of entropy.
I generated a spreadsheet with about 55,000 words by collecting scrabble lists and pasting them into excel.  More entropy there.  By using random numbers to select words, I can generate a strong passphrase which is short enough that I have some chance of remembering it.  The scrabble list also has some real oddball words.  Makes for a memorable passphrase.  The extremely commonplace vocabulary words in the electrum and diceware lists generate very bland phrases that are not memorable at all, besides just being very long.
Electrum should have gone with a much bigger word list.