Are you worried about rogue applications on Android? If so, that should not be an issue as applications are protected from each other by the Android security model.
You could conceivably have a rogue application that uses a bug in the Android system to elevate privileges. Yes, in that case, all bets are off. But in that scenario an attacker could conceivably do a lot more damage anyway (e.g. use your e-mail account to recover passwords to your bank account). You really are at the mercy of your handset manufacturer to release security updates before this becomes a problem.
And you are at the mercy of your Android market provider (typically Google) to hopefully catch rogue applications early on and to remove them from the market and/or to notify your phone to disable them.
But all of this is clearly outside of the scope of the OTP project.
Or maybe you are worried about rogue applications on the Linux machine having access to your PAM module. Yes, they do. But that's not any different from rogue applications having access to your SSH credentials or being able to install backdoor applications.
Linux is not designed to safely allow execution of arbitrary untrusted code. If an attacker can run arbitrary code as either a user or worse as "root", then they can easily subvert all security for that account.
Sandboxing protects against specific attack vectors (e.g. in hardening browsers against attacks), but sandboxing of arbitrary untrusted binaries is still a largely unsolved problem.
Having said all of this, OTP in general is a good way to introduce a second factor that makes attacks a lot more difficult. But it is never going to be a way to make attacks impossible.
At some point, you have to realize that if a legitimate user can access the system, then a sufficiently motivated and resourceful attacker will also be able to do so. Nothing will ever prevent that. Ultimately, "rubber-hose cryptography" (aka torturing your victim until they agree to log into the system for you) always works.
All we can hope for is making attacks so expensive and difficult that they become unattractive. OTP is a step in this direction.