Great question! From what I understand, a big part of the security benefits that are gained from this split result from hosting the app on a different top level domain than steemit.com. Steemit.co is basically as familiar as you can get with a different top level domain. There may be some education required to instill confidence in this new domain, but we believe that the security gains are worth it. It's analogous to the argument against multiple keys. Yes, having more public-private key pairs is more complicated, but the alternative is like using the same password for your bank account and Facebook account.
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Ok I understand the reasoning, but using steemit.co instead of steemit.com seems like a typo or phishing attempt, why not use wallet.steem.com or a completely different top-level domain such as steemit-wallet.com? This would look more professional.
Agreed; I was thinking that it was a typo when I read the URL as well. I guess we will get used to it though.