But putting that aside, there are two potential problems I see with this particular implementation:
1. The word list is way too small - it picks randomly 12 words out of pool with only 1626 words which makes mere ~7.42x10^29 possible combinations assuming that the random is truly random. That's fairly lower than 128 bits of entropy (~3.4x10^38) - in fact almost half a billion times lower, so even with the assumption of true randomness or using the browser's crypto facilities you're getting at best 99 bits of entropy. Either increase the word list to ~8400 words or pick 17 words instead of 12 if you're aiming at 128 bit.
(Disregard this part, it applies only to unique pass generation.)
2. Relying on the user to generate sufficiently safe seed can easily break any security. Users are by definition lazy, and having them to move their mouse can end up in repetitive left-right movement over a small area (usually near the 'generate password' field) which can be exploited to lower the probability of picking some of the combinations at random. I'd add at least a delta check (
if(Math.abs(lastX - e.pageX) < 20 || Math.abs(lastY - e.pageY)) return; ...) to force the users to move their mouse a bit more randomly. It wouldn't hurt to use some of the browser stats apart from the new Date to add to the seed as well.