I launched the 1.3.0 version tonight (hadn't noticed it had updated) and couldn't load my old saves (as expected). Reverted to the beta "old_version" and on load the game skipped the main menu and went directly to a completely empty galaxy on turn 616. Manually returning to the main menu and attempting the load a game hung. The fix was to delete the custom races in Users\...\AppData\LocalLow\Praxis Games\ISG\Races--this allowed the game to start and load my existing saves. I'd hypothesize maybe when I loaded 1.3.0 it changed the format of the XML files under Races in a way 1.2.4 couldn't handle? I'm fine with the work-around but might let other uses know (unless I just missed that instruction somewhere).
You're correct in your assessment that the custom races were updated when you launched the new version, which in turn made them unsuitable for running in the old version. So, the old custom races need to be deleted to be able to play the old version. I'll add a note to the update post. Thanks for letting me know about this.