Share without an Email server is definitely an issue in some cases, but in none of those cases would I see Forgot Password being an issue for Share to handle. However, in our (common I'm sure) use case, we heavily leverage the external user invitation features and have found a few major holes.
1) If an external user is invited to a site, but don't reply to that invitation, subsequent invitations prompt the user to login, not configure their account…
2) If an external user forget's their password, it requires human (expensive) intervention…
Share DOES know how to reset the password though, as I am able to handle that when logged in as an admin. This significantly hampers a key area of competition directly with sharepoint, which is the ability to invite non-local users into a share site.
Share has the ability to generate new accounts and invites, so most of the code is there…