Q: How do you reset a forgotten encrypted backup password?

You can't.  You must delete that backup and create new backups with a new encryption passcode or unencrypted backups.

The best I can suggest is start guessing; you get unlimited guesses. If you are like most people it is a password you have used in the past. To speed up the process you can uncheck "Encrypt backup" in iTunes and you will be prompted immediately. Another option that sometimes works is a good-quality backup password cracker app; the only one I know of that actually works is from Elcomsoft. It's target market is law enforcement, and it is priced accordingly. However, the trial version will deliver the first two characters of the passcode if it can crack it. Note that it won't work if you are in the habit of using strong passwords, as it does guided brute force search.