Is there a reason why that sketch works fine in Arduino v0.23 and then not so on Arduino v1.0?
Obviously. We just haven't figured out what that reason is yet.
Are you stating that this is the reason?
No, but it is flawed code, so it needs to be fixed. Fixing it may, or may not, address the issue with the code not behaving correctly on 1.0.
If it does, we know one thing. If it doesn't, we know something else.