The changes described (screenshots included) in this pull request are already in their way to Tumbleweed (sr#356569) https://github.com/yast/yast-users/pull/84
So the question now is - should we adapt the control.xml file for Tumbleweed or is it fine to not offer the selection of password encryption method during installation anymore?
In case you believe it should be there, what do you prefer - the verbose "users" proposal or the more concrete "users_encryption" one?
Cheers.