CreateUserPkg to update passwords?

sysadminctl
    -deleteUser <user name> [-secure || -keepHome]
    -newPassword <new password> -oldPassword <old password> [-passwordHint <password hint>]
    -resetPasswordFor <local user name> -newPassword <new password> [-passwordHint <password hint>]
    -addUser <user name> [-fullName <full name>] [-UID <user ID>] [-password <user password>] [-hint <user hint>] [-home <full path to home>] [-admin] [-picture <full path to user image>]

Pass '-' instead of password in commands above to request prompt.

Doesn't answer your specific question, but might provide you with a different approach in your goal. Tool was introduced with OS X 10.10 I believe.

To answer the question directly, Yes: CreateUserPKG does update existing passwords, if the account already exists. (Make sure the UID doesn't change, otherwise permissions on the home folder will be incorrect).

Two questions from the posts above: 1) If you create a local user from the policy shown above is that hidden? Can you make it hidden if its not? 2) Does CreateUserPKG work with El Capitan?

Thx

CreateUserPKG does work on 10.11. I'm not sure you can create a hidden account with the policy option, although sysadminctl can.

Correct. It does work on 10.11.4 in my testing. I wouldn't set the UID to below 500, which would automatically create a hidden account.

I would set it to 501+ then use the sysadminctl command to set it as hidden. See this:
http://support.apple.com/kb/HT5017