I just stumbled on
this nyt article:
The State Department will soon begin issuing passports that carry information about the traveler in a computer chip embedded in the cardboard cover as well as on its printed pages.
Privacy advocates say the new format - developed in response to security concerns after the Sept. 11 attacks - will be vulnerable to electronic snooping by anyone within several feet, a practice called skimming. Internal State Department documents, obtained by the American Civil Liberties Union under the Freedom of Information Act, show that Canada, Germany and Britain have raised the same concern.
"This is like putting an invisible bull's-eye on Americans that can be seen only by the terrorists," said Barry Steinhardt, the director of the A.C.L.U. Technology and Liberty Program. "If there's any nation in the world at the moment that could do without such a device, it is the United States."
I'm tired, so apologies if I fail to write anything coherent here. I will say that this rather freaked me out, and my mind immediately jumped to many times I've walked around cities in Europe trying my best not to look like a tourist, with my passport tucked into a inside pocket. Carrying a passport with one of these chips would create a invisible (unless you had an inexpensive reader that knew what frequency to check for) "flag" on you that would label you an American. I can think of way too many situations where a bad guy is looking for an American target & just has to walk around until some device he's carrying flags someone as carrying an American (or Australian or any other country that adopts these) passport.
I'm not an expert on this technology, but I believe that you have any decent EE skills you can rig up something the size of a palm pilot to detect the signal- you just have to know what you're looking for.
The chips raise the possibility of someone "brushing against you with the equipment, in a briefcase or another disguise, and hoping they can read it out of your pocket or purse," Mr. Pattinson said. Another possibility is someone embedding a reader in a doorway, he said.
But he said low-cost fixes were available. One would incorporate a layer of metal foil into the cover of the passport so it could be read only when opened.
Another would put a password into the printed information in the passport. A reader would optically scan for the password, which would be visible only when the passport was open, and then use it to obtain data from the chip.
Another possibility would be to keep the passport in a foil pouch, like those issued with highway toll-collection devices so they can be carried through a toll booth without being read. In multilateral discussions, though, some experts said they feared that terrorists would use the pouches to smuggle weapons.
Kind of gives new meaning to wearing a tin foil hat... perhaps when I replace my passport in a few years, I'll start packing some tin foil in my bag to wrap my passport up in...

I know these technically have a range of inches not yards, but I have two parking passes and a work badge that all work on this technology, and I'm lazy enough to know that they will generally work at about 9 inches away from a reader. In a crowded city or cafe, that's a pretty small distance.