The password is still plain text in the member file in the members directory via FTP.
I myself have a semi large board and I've yet to really experiance any real issue with this. Some filters block out "your password is" now adays; this is an issue with the ISP and not the software.
Your best bet is to tell them that if their ISP is blocking the registration/forgot password emails that you login to FTP and get the password and email it to their address; that way you can have a "request password" form which emails you (hopefully bypassing your spam blockers) and you do the hard work <img src="https://www.ubbcentral.com/boards/images/graemlins/wink.gif" alt="" /> ... As #2 won't work from a security standpoint.
