1. unzip the 1.1.3 image (change ipsw to zip and unzip)
2. compile, install vfdecrypt. I found this in the jailbreak-1.1.3 package but you might find it elsewhere. to compile from this tree i had to change the Makefule so that CC=gcc, not the iphone ARM cross compiler.
3. decrypt the dmg containing the passwd files:
./vfdecrypt -i 022-3743-100.dmg -o decrypted113.dmg -k 11070c11d93b9be5069b643204451ed95aad37df7b332d10e48fd3d23c62fca5170558164. mount and scp passwd and master.passwd over to your phone
in the future to change the password copy the hash output from the following command into the master.passwd file for the root user:
perl -e 'print crypt("yournewpassword", "/s"), "\n"'("/s" is the seed and can be changed to whatever you like as well)