Yes, those warnings were telling us that we weren't using an initialization vector (IV, aka a salt) when hashing the passwords. Facepalm. I suppose that demonstrates the dangers of developers thinking they should be diving into level 3), and also the benefit of (my) being aware of more of the theory than we should have been implementing ourselves.
Yes, I filed a bug to start using hashes, re-hash all our users' passwords, and get rid of the patch. This was also well before those massive GPU cracking systems, so everything turned out fine.