This plugin will automatically rehash the passwords of users you have beforehand imported from a Magento database to your WP database.
No. You will have to do this yourself manually.
The passwords of Magento customers are stored in a table called "customer_entity_varchar".
You will need to execute an SQL command on your user table too, so it can take into account Magento's long password hashs: ALTER TABLE
user_pass VARCHAR( 255 ) CHARACTER SET utf8 COLLATE utf8_general_ci NOT NULL DEFAULT ''