Thanks Bosco, DrakoRod, and Adrian. Between the three of you it became obvious that I was doing something wrong. And yes, in the end you were right. Doubling the quote does indeed work.
It turns out it this particular password also had a \ in it, and my console width wrapped right before it, putting it as the first character on the next line, where I just didn't notice it until a few minutes ago. I changed that to a ^ for the time being, and then doubled the quote whereupon it all worked. I will certainly look into how to escape the backslash too, but that's for next week at this point.
aklaver@panda:~> psql 'dbname=test user=test_user password=test\\pwd' psql (9.0.17) Type "help" for help.
test=>
Thanks again Adrian! Figures it's that easy.
Confession time. When I'm trying to work through something like this where different iterations are going to be tried, I sit down and spell them out first. But since I was remoted in and things were going so slow (and I was pretty tired), I just tried different combinations on the single quote. When I noticed the backslash I tried to double it, but with no luck. However, in all honesty I don't know what I was doing with the single quote at that particular moment. Bottom line is I probably shot myself in the foot in several ways with this one.