I'm not sure that would work. If that were the case, then anyone who did not login between when the decision to go 16 characters was made and today would have t

I'm not sure that would work. If that were the case, then anyone who did not login between when the decision to go 16 characters was made and today would have to login one time with their full password so that they could confirm that you know the true password and compute the new hash. Then all subsequent logins would be 16 characters long. But I don't think that this dialog is only being presented to people who have magically logged in in that time interval, it is being offered to everyone. So, unless there is some evidence that they are right now performing password swaps for people who haven't logged in in a while, the two hypotheses in the article and the only two that are possible.