Moments after I posted the previous entry, I received notification that Ulrich Drepper has now published his new proposal to add sha256 and sha512 to crypt. It includes a proposal to lengthen the salt to 16 and allow for the number of rounds to be optionally specified in the salt string. According to the specification, “The maximum length of a password string is therefore (excluding final NUL byte in the C representation):
SHA-256 80 characters
SHA-512 123 characters” 
So it looks like we might get a stronger algorithm for passwords widely adopted in the near future.
BTW, I saw this come through the gov-sec mailing list which is a mailing list for Linux adoption by U.S. government.