Privacy? The password is visible through the control panel anyway.
I've found that problems requiring an Admin to change the password of a user comes up just as often as those problems where you may need to change the e-mail address or public name for a user at their request.
Unfortunately there are just some people that can't make these changes in the profile themselves no matter how easy it is for them to do. In those cases it is easier to just make the change for them instead of being forced to repeat the instructions over and over. :rolleyes:
Just to make it perfectly clear this is something I would only use at a member's specific request.