I think this must have been it. I downloaded a different driver, libdevartodbcpostgresql.4.5.1.so, which claimed to support Unicode. I still can't use credentials through iris, but by putting the user ID and pw in the irisodbc.ini file I was able to successfully connect. Since this is just a personal project that's getting shut down in a few months, this works for me.

My resulting irisodbc.ini file looks like this:

[ODBC Data Sources]
HL7Interface = HL7Interface

[HL7Interface]
Driver = /usr/local/devart/odbcpostgresql/libdevartodbcpostgresql.4.5.1.so
Host = localhost
Database = hl7interface
Username = postgres
Password = <RealPW>

For any future people, I ended up using the driver for PostgreSQL found here: https://www.devart.com/odbc/postgresql/

No, I still get this in the logs:

2024-03-29 17:49:51.436 EDT [17670] FATAL:  password authentication failed for user "p"
2024-03-29 17:49:51.436 EDT [17670] DETAIL:  Role "p" does not exist.

I have confirmed that isql works perfectly. The problem is that iris is trying to log in using only the first character of the given user ID and seems to ignore what's in the DSN settings.