Security :: Prevent Spying Keyboard Input?

I just made a script to read out /dev/input/event3 into a file (My keyboard is identified here [ Machine is a laptop which runs on slax-atma distro ]). Then used a hexdump to convert the binary into hex. After that used a gwak script to print out the keys corresponding to each keyboard input. So now when I put this in my rc.local , It is taking down all the keys I press. Including login passwords (In short, each and every keys I press).Isn't this a big security risk, because intruder who has a physical access to my machine or has root password can put this file in rc.local and run a script to mail him all the details like my passwords, account and PIN numbers.