Since we are going to store passwords encrypted in database, the whole process of work with passwords will be changed:
forgotten password - will not send existing password to the user's email, instead it will send a link to "set a new password"...
then "Add New User" from admin module could just always automatically generate a new password and send "welcome" email with a password once user added.
or it could generate password automatically only if password not entered.
then have a hint "if not entered, password will be generated automatically"
and then have a hint on "add new user" - "welcome email with login/password will be sent to the user"
Suggest to generate default password on new user creation
With "show password" checkbox.