"Then you have to be submerged to use the hydrophone"
Even though the sonar manual at the time gave instructions on using the sonar on the surface. Having surface use was well within a submarines capabilities. There were three different sonar arrays on a WWII US submarine. Two could be used on the surface.
Chapter 5, page 38
"When your submarine surfaces, you will continue searching. While it is running at a slow speed, you will be able to listen efficiently."
http://www.hnsa.org/doc/fleetsub/sonar/index.htm
In the book,
U.S. Submarines Through 1945: An Illustrated Design History, By Norman Friedman, page 198 states:
"Only in 1940-1941 did the U.S. Navy encounter British thin-steel domes, which made it possible to operate at about 15 kts."
This made it possible to use passive sonar to 15 kts.
By 1945 a single capital or merchant could be detected at 10,000 yards, a convoy at 15,000 and escorted capital ships at 20,000 yards.
This makes the idea of mods reducing passive sonar levels unrealistic.