People being hacked since the last Server Check.

I believe it has been said several times that Nexon stated that they do NOT store actual passwords ANYWHERE. They only store the encrypted ones, which are then decrypted by the server itself. So, unless someone also got his hands on the server files or the algorithm used for the encryption, I doubt that getting your hands on the database could be of any use.

Not quite right; the client encrypts what you type in, then compares the two encrypted versions. Unencrypting passwords isn't easy or they wouldn't be useful.

However, if you can grab the encrypted version, and you know the exact input parameters (or just be man in the middle), you could fake it. But that's more a question of client-server security than anything players can do.