At long last, I think there is light at the end of the tunnel.
This commit should not complete support for importing data from phpbb3 to drupal. This should be available in a HEAD release within the next few hours for people to test out.
So, where are we?
1. The module is much simplified from when I took over in December. This is true both internally and externally as seen by the user.
2. User import for phpbb3 now works. This includes importing passwords, using the phpass module. There is a caveat - workaround also supplied in that link.