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Interesting point on the UK laws, but I doubt PII is kept alongside login data, just referenced, and removed as needed without removing a user's login credentials.

Far from an expert, but hasn't flagging an account as needing a password change on next login been used as a way to migrate to properly encrypted passwords in the past?

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Often. But you want to back it up with a blanket invalidation and password deletion after some grace period, to deal with the case where the user just never logs back in - and a password reset process outside the auth flow, to handle anyone who comes back after that.

A strategy that has worked great for me transitioning off of poorly-thought-out legacy password storage schemes is to take the "bad" hash you have for everyone and treat it exactly as you would a plaintext password - in other words, salt and properly hash it the same way the new passwords are done. Then I delete the unsafe hash and flag that account as "use the old hashing scheme on the password first before normal authentication process, then correctly re-hash and salt the password and store it normally."

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