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After reading all that, am I the only one who thinks that sites with security practices that egregious aren't simply fronts or traps for mining this kind of information?

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Hanlon's razor disagrees.

If they were fronts, they wouldn't have done something as stupid and high-visibility as resetting everyone's password; that's the desperate act of someone who doesn't know what he's doing.

Probably right. But wouldn't action like that only have mild effect on the value of the stolen data anyway? There were no other announcements that came along with the forced password reset, so most people not knowing any better would change their passwords for 000webhost only and move on. But isn't the real value in cross-referencing multi-use passwords on other sites? I would imagine that only a very small percentage of 13 million users that are met with a forced password reset would proceed to then change that password everywhere it's used.

Fun thought experiment: What would you do differently if you were to actually set up a front operation solely for the gathering of password/email credentials from unsuspecting users? Would you make it stupid simple for people to hack such as 000webhost? Thereby dodging blame, or would you just leak the data in secret in obfuscated chunks so as not to give away the source?

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