Why can I browse a password protected drive?

So I have a question that may be something easy... I have a password on my user account on my macbook pro, I also use a firmware password.
However, I noticed when booting from an external drive with Lion and a bunch of utilities I have (because I keep getting bitmap and other errors), I can wander through the macbooks original on board drive no problem. I can see and act with all files, which correct me if I'm wrong, I couldn't do with out at least authenticating in previous OS's. What am I seeing there? Am I missing something? Is it because I am booted past the firmware password to the other rescue disk? I remember having to authenticate anything to do with other user accounts, but maybe I'm remembering it wrong.
It feels very unsecure, except when I stop and think about how I did have to use the firmware password, but still, I thought I'd ask the question. I don't really feel the need for filevault.

What application are you using on the iMac?

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