I wouldn't completely trust the WordPress Codex for everything. It has a lot of missing/out of date information, and the function descriptions don't always jive with the actual code. That function is still in use and in this case it appears the information is only partially accurate. From what I've gleaned looking through the code, is that (in 3.5.1) WordPress uses phpass portable hashes. These hashes do ultimately rely on md5. The phpass class is initialized with an $iteration_count_log2 of 8, but the actual number of iterations of the md5 function itself is 8192 (based on my testing). While this current hashing is not perfect, it is better than an unsalted single pass of md5, or the only 8 passes as documented in the Codex.
I believe that phpass portable hashes were used for their cross system compatibility, as prior to 5.3 not all crypto functions for PHP were available on all platforms. With 5.3 all crypto functions are now built in, so it should be possible to use the non-portable hashes of phpass everywhere, but I believe that WP still targets 5.2. The version of phpass shipped with WordPress has support for non-portable hashes, and it would be possible to make a plugin that enables this, but as you've stated, it isn't likely that many WP sites have a hashing plugin installed.