> The case that ENCRYPTED
> protects against is database superusers finding out other users'
> original passwords, which is a security issue to the extent that those
> users have used the same/similar passwords for other systems.

I just want to note that md5 is not much of a protection against this
case these days. Take a look at this:
http://www.golubev.com/hashgpu.htm

It takes about 32 hours to brute force all passwords from [a-zA-Z0-9]
of up to 8 chars in length.

Maybe it is time to look at something like bcrypt.
http://chargen.matasano.com/chargen/2007/9/7/enough-with-the-rainbow-tables-what-you-need-to-know-about-s.html

Greetings
Marcin

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