Certainly a bulk SQL insert will be faster than using either the webservice or the direct API but both of these options are pretty fast. How many user accounts are you trying to create and how frequently will you be creating them?
As a data point, I was able to create 10,000 user accounts in 2 minutes and 17 seconds using the webservice; admittedly my test was pretty basic.
Do you remember who you spoke to about creating encrypted passwords directly in the database?
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