As an example: The password list might consist of entries encrypted with a public key. The private key might only exist on an air gapped laptop with its communication ports filled with epoxy in a secured facility using trusted humans to enter the encrypted password and retrieve the decrypted plaintext.

I have no reason to believe the above is true, but there is also no reason to automatically believe there is a mechanism available to attackers of a compromised machine to decrypt all encoded materials on the machine.