Ah, you're using redhat. In this case, recovery is quite easy. Just boot from your install CD, then type linux rescue at the boot: prompt. Once you've got a prompt, type chroot /mnt/sysimage, and you'll be dropped to a root shell on your linux install. Then you can just type passwd to change your root password. Once you've set a new password, type exit and press enter. Then press ctrl+alt+del to reboot. Log in as root, then use gedit to change the grub password in /boot/grub/grub.conf. Simple

If you want to add a password to grub, you need to add a password hash to the grub.conf file. I recommend creating an md5 hash. Then between the splashimage= line and the first title line add this:-

password --md5 md5hash

Replace md5hash with the hashed password you created. And yes, you can use any text editor you like to modify grub.conf. It is just an ordinary text file after all.