While I do agree that there might be benefits to digital signatures in extensions, I cringe at the idea of an "ActiveX style pop up," or anything like that. There are plenty of secure means to authenticate a package...(clicking "OK" is (IMHO) just another layer of false security.)
Using an MD5 checksum is really all that is needed, but then the problem becomes validating the checksum. Well, since (with Tiny Core) there is a small, definite list of packages, all authentication could theoretically come down to a single, digitally signed list of MD5 checksums. That way it could be verified through a script, and not present any extra effort by the end user.
Since I do think it's an important issue, I'm interested in hearing alternative ideas.