It should use SHA-2 if it is used for /etc/shadow.
This bug appears to have been reported against 'rawhide' during the Fedora 11 development cycle. Changing version to '11'. More information and reason for this action is here: http://fedoraproject.org/wiki/BugZappers/HouseKeeping
As the password saving in pam_unix is considered as legacy functionality in upstream and the preferred way of password history handling is pam_pwhistory I don't think it is much worth it to enhance pam_unix this way.
Is it a good idea to be leaving this potentially broken functionality in pam_unix rather than removing it or fixing it? Perhaps update the man page for pam_unix stating that the remember parameter is legacy and pam_pwhistory should be used instead
The pam_unix manpage already mentions that.