[thaumasiotes]

The distinction you're trying to draw vanishes as soon as this becomes a standard practice. Passwords are already stored hashed and salted. They get compromised anyway, because the data is valuable. Under the circumstances you describe, cracking 5f4dcc3b5aa765d61d8327deb882cf99 (which takes less than a second) is just as valuable as cracking a password database entry is now, because the underlying issue -- reuse of credentials -- hasn't gone away. (In fact, you're encouraging it, so it's probably somewhat worse.) As long as people are reusing credentials across multiple websites, those credentials will have value greater than that associated with their use on any particular site, and other people will put in the effort to crack them. Even when you're generating and submitting a cryptographically secure salted hash, you haven't improved on the situation now, where databases store a secure salted hash of the password.