Did you try sending or downloading any new messages? You wouldn't have been able to without knowing the account passwords. That's what the password protection actually does; it stops others pretending to be you and thereby getting your messages or sending in your name.

If you want to make your email store safe, you need to make your computer safe. Use the User Accounts and data encryption provided by your OS.

Your email password protects unathorized access to your account at to the LOCATION of your mail provider - not local copies of your email.

The protection of your local copy of email is your business and that of your operating system. (what Zenos said)

Also see http://kb.mozillazine.org/Protect_the_profiles_contents