How does one parse encrypted passwords in the config?

You cannot decrypt anything that has been encrypted with the master key.

Copying and pasting config will work, but only if the config elements were encrypted with the same master key.

By definition, BigIPs in a device group have the same master key so that encrypted config elements can be transferred.

Either set the master key on the target device prior to starting configuration, or change the master key on the source device to match the target, save and reload the config, and then copy the config stanzas to the target.

Even easier - build a device group between the two devices (or use a temporary VM as an intermediary), and sync the config.