First of all, in cryptography the point of a random number generator is NOT to give irreproducible results. THe whole point of the random number generator in this algorithm is to produce keystreams. The user gives a password which is converted into seeds for the random number generator. The random number generator gives modulated output and reseeds itself to give more output for as many iterations as are necessary. When the user enters a certain password, a certain key will invariably come up. This way, when the user decrypts the message all he has to remember is the password. If it were not this way; that is, if the same password did not always produce the same results due to the use of system entropy as a secondary seed, then when the user tries to decrypt he will fail because the system status will have changed in some way and the key will be different. This will produce incorrect output of decrypted text.

Say I encrypt "apple" with password of "dog" and it comes out as "djfghkjdf". Now, if the same output occurs with each seed then I can enter "dog" and get back the key to reverse the process. But if entropy is used, then the second time I enter "dog" I will not get the same output, and I cannot decrypt my message. This is why entropy seeding is COMPLETELY UNNECESSARY in cryptography.

Second, I will state the purpose of the hash as clearly as I can...

For a n-character ASCII password, the number of possible keys is 95^n. If a single password is used then there will invariably be a limit on password size. If the limit is 20 then a computer only has to chech 95^20 keys to break the password. But if a hash is used, then the user can use a password of literally any length. The hash will shorten it if it is too long but not just cut it off. And if you are using a hash to shorten long passwords then you want the hash output to be as large as possible so that different paswords will produce the same hash as rarely as is possible. If you have a 32-bit hash then there will inevitably be two passwords of over 32 bits whose hashes are alike. By using a large but secure hash, we allow the user to use a password of arbitrary length while minimizing the chance that two passwords will come out with the same hash.

Finally, extra steps actually do make things more secure. A combination lock with 3 numbers is always more secure combination-wise than a lock with only two. Similarly, AES