Hi Jai,
To follow up on what Chris was saying...
If you want to use the Password hook for "Simplified Sign-on" You will need to set up Self Service Password Reset: SAP NetWeaver Identity Management Identity Center Implementation Guide - Self-Service Password Reset
Unfortunately, as Chris mentioned, there is no "Big Bang" solution. As users change their passwords via IDM the passwords can be distributed to systems via the Framework (including AD)
Of course one could "induce" this but changing their password expiry dates, but that can cause more issues than it hopes to solve. 
BTW, as far as I know there is no issue between the PW Hook and Version 8. However if there is, you should open a note on it ASAP.
Regards,
Matt