The man page (the manual command) for rez(1) states that you must be in 32-bit mode and run the command from the command line (without using launch). You didn't specify the environment you were in when you were trying to run this.
The -o option to rez seems to work fine as long as you don't specify an output filename with a % appended to it. Rez is supposed to take the name you gave it from the -o option and affixes a % sign to it.
The -s option to rez also seems to be broken, but the -i option (which basically does the same thing) does work correctly.
Otherwise, this problem is currently (as of August, 1990) without a solution.