basically, what you're saying is that every encryption can be broken. yeah sure, you're completely right.
But! Even if you spread it over more boxes, as you say, you will need lets say something like 2 weeks to break it.
Better 2 weeks, then no time at all.
And true, the servers SHOULD be more safe, but i've experienced a couple of times that the enduser wasn't even aware of the risks..
It's the ISP's task, but still i think that i, as end user on a discussion board, would beel more comfertable, knowing that my password is encoded, that even admin's can't see it blindly..