passwords and 7.3

I have upgraded from 7.2.1 to 7.3.1, but I am having trouble with user
authentication. I have in my pg_hba.conf:

host all all 127.0.0.1 255.255.255.255 password passwords

This is exactly what I had for 7.2.1, with the addition of the extra
"all" column. I made sure to do a pg_dumpall from the 7.2 database and
restored on the 7.3 database. I also copied the passwords file I had in
the 7.2 data directory to the 7.3 data directory. It seems, however,
that the passwords file is not being read or is being interpreted
incorrectly. When I connect to the database server over TCP using the
same username and password that worked previously, it fails. The
postmaster spits out an error (elided is not the actual username):

FATAL: Password authentication failed for user "elided"

Clearly, the TCP connection is being made properly and some username and
password is being sent. The connection is being made by the latest and
greatest JDBC drivers (downloaded from jdbc.postgresql.org less than a
week ago), and it had been working fine under 7.2.1. I compiled the
postmaster myself with the following configuration:

./configure --prefix=/space/postgresql7.3.1 --with-includes=/usr/local/include --with-libraries=/usr/local/lib --enable-depend --enable-recode --enable-odbc --without-java --enable-syslog --enable-unicode-conversion --enable-multibyte --with-openssl --with-unixodbc

make install install-all-headers

I can't find any reference to anything changing with password
authentication from 7.2 to 7.3, but something is clearly wrong. I also
don't seem to have a pg_passwd executable, and I'm not sure why that is.

Is there some way to get 7.3 to believe in the existing passwords file?
Is there some way to take the existing passwords file and put the
encrypted passwords in the database somewhere that authentication can
find it?

--Greg