It does. But is is still two steps. This isn't really a problem though, just out of curiosity.
I don't understand the reason to want to do this, am I missing something aside from why should the system stop you when it could just warn you (similar to requirements for root).
When upgrading to a stronger hash I have never tested if it stops you from using the same password when the hashes are different because it matches both but I expect, that would be how it works. Is that the issue? In that usually you would expect a password change at upgrade time but on a new install that may not be a consideration.