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Of course, an administrator in WordPress can reset other users' passwords (including that of other administrators). However, can a WordPress administrator see other users' passwords? Phrased differently, does the WordPress software protect registered users from an unscrupulous administrator observing their passwords?

Of course, since WordPress is open source, I realize a malicious administrator could hack the software to divulge users' passwords. But I'm asking about the standard WordPress build.

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No, passwords are stored as a hash in the database. This hash is very difficult to reverse. Here is more information how WP encrypts passwords: http://codex.wordpress.org/Function_Reference/wp_hash_password

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