passwd will change the user's password in whatever way the system has been set up. Unix systems don't all use /etc/passwd, actually most standalone systems use /etc/shadow not /etc/passwd. Most networked systems use ldap or kerberos or even opendirectory. If passwd has been tailored correctly to the mac it should change the user's password correctly. Maybe not the keychain access password though.

N.B. I haven't tried using passwd in 10.5.

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I did just the following after rebooting to single user mode in 10.5 and it worked:

/sbin/mount -uw /
passwd username

After the next reboot my machine didn't automatically login, even though it is configured to do so, and it prompted me for the keychain password in order join my wireless network, but it did honor the new password and it sounds like you can subsequently reset the password in System Preferences to change the keychain password.

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