<i>"a OTP doesn't stop a man-in-the-middle attack"</i><p>This is true.<p><i>" Once the attacker is on the remote system they can open a backdoor."</i><p>If you're using OTP's, then there's really only one way an attacker could do that: hijack your session after you use the OTP to log-in, but before you have logged out.<p>OTP's won't protect you from such a session hijack.  However, they will protect you from a simple keylogger on the untrusted machine you're logging-in from, since recording the password you used to log-in will be useless for the attacker (as far as future logins are concerned).<p>This is why OTP's are very, very important and useful for access from untrusted systems... particularly for uses such as reading your email through webmail interfaces while away at on a business trip or on vacation, where your only access to your email might be through an untrusted computer at an internet cafe or somesuch.<p><i>"Sand boxing seems to be a good idea"</i><p>I'm all for it.  But that is a solution to a completely different problem: how to keep the rest of your system from being compromised further once someone has already hacked in to a part of your system.  OTP's are a way to (hopefully) prevent that from even happening (by neutralizing the usefulness of a password that has been compromised on an untrusted machine).