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Does this also mean parts of memory containing, say, passwords could be send to Google?

This "end to end" encryption happens in the browser. Google is the browser. Google dont need your keys, they have the plain text.

Also, other browser extensions may be able to access what is going on in the browser. So Google and (insert list of other parties.)

Other software on your computer might as well. Or people walking by in the hallway. So Google and (insert everyone in the world).

I think he was thinking the "Save Password" feature.

I'd hope not. My guess is the extensions data in memory are included with the crash reports and it doesn't distinguish between extensions.