Reduce Password object creations needed for an account merge

Also only do the ISO 8859-1 to UTF-8 for old (non Pbkdf2)
Passwords.

Bug: T78727
Change-Id: I642884f93673b300528d91968c9b0c68aa470545
(cherry picked from commit 727f8517ccd28e03486361e6c13997c92c8a609e)