> -c 'ALTER USER timeshift_user PASSWORD '"'"'timeshift_pass'"'"';' > I am still trying to work out what that quoting is doing?
That's standard for -x output for some versions of bash. FWIW, none of the shells I had access to output it quite like that, but who knows what shell the OP has. It's basically trying to stop the current ALTER USER statement, add a new single quote (but wrap it in double quotes!), then start a new single-quoted string (the actual password). (So single, double-single-double, single). Then do it all again at the end. It's valid, and it should really be equivalent to PASSWORD 'timeshift_pass' so it's hard to see what the problem is.
The fact that a manual ALTER ROLE cleared it up certainly suggests that something is going wrong, however, and the SELECT rolpassword output definitely means it had some password. A possibility is that somehow the user password was already set and this particular statement was not run (or run on a different cluster).
Another debug technique might be to have the shell script write the ALTER USER command to a temp file, then slurp it in via psql -f. Then you can cat that file as part of the script's output
