After conferring with Terry on this issue, we found that the ASE portion of the fix for this was implemented, but the Rep portion was not. The recommended workaround is documented in the New Features Guide:
"Password Expiration Intervals for Master Replication
If you set up Adaptive Server master database replication in a warm standby environment, Sybase recommends setting longer password expiration intervals on the standby master database compared to the expiration intervals on the active master database. This allows the active master database to control any change of password and allows replication of password changes to proceed."
I hope this Helps,
Dale