Type 7 passwords as used by IOS are not properly encrypted - this is because there are many situations where the router itself needs to know the original password, such as when authenticating using CHAP. They are hidden to stop someone just peering over your shoulder at a router configuration and seeig passwords, but you can convert back to the unencrypted form if you need to. Although this is a PHP page (At least until I rewrite it into perl!) the code is Javascript, so this doesn't send the password over the internet. Of course, if you're paranoid you shouldn't take my word for it!
In general, if you don't need the router to know the password and only let people log in locally using it, you can use secret instead, i.e. "username fred secret bloggs" and "enable secret ILikeCheese".
The original Perl code for this is available here