Your target.db.password property in rehost.properties is set to encrypted.wt.pom.dbPassword. Which means the rehost utility is pulling the Oracle password value from the same place as the wt.pom.dbPassword property in db.properties. Since this password is being pulled from one of Windchill's property files, let's try resetting/re-encrypting this password using xconfmanager instead of the setAuth utility. In 10.1, xconfmanager is smart enough to automatically encrypt password properties, so you just need to run the following command:
xconfmanager -s wt.pom.dbPassword=<Password> -t db/db.properties -p
Just replace <Password> with the password of your Windchill DB user (pdmlink). After running the xconfmanager command, try running the rehost utility again.