Although the WordPress DB user has a random string password it is not encrypted (actually the term you are after is not actually encryption, it's hashing). So the password that WordPress uses to connect to it's own database is not hashed
Perhaps where the confusion is coming in is that PHP apps such as WordPress hash the passwords of the users (which are stored in the WordPress DB) - but not the MySQL password used to connect to the DB (i.e. connect the PHP app to its DB).
AFAIK DB user passwords are plain text only
Although the WordPress DB user has a random string password it is not encrypted (actually the term you are after is not actually encryption, it's hashing). So the password that WordPress uses to connect to it's own database is not hashed
Perhaps where the confusion is coming in is that PHP apps such as WordPress hash the passwords of the users (which are stored in the WordPress DB) - but not the MySQL password used to connect to the DB (i.e. connect the PHP app to its DB).
Perhaps have a read here (about halfway down).