Why can't I copy paste my password into the pinentry window?

This is a limitation of OS X password fields and affects passwords using accents or german umlaute. Apparently it's meant as some kind of security feature.

However a workaround exists: Once pinentry asks for your password, enable "Show Typing" option and you'll be able to copy paste your password.

The screenshot below shows the checkbox in use.

pinentry_ShowPassphrase.png