1) Yeah. Although you can circumvent it with cheats, 0H0M progress lost. There is no NEED to replay it, the fix just prevents from having it happen in the first place.
2) Other mods? 1.5 had this, 1.6(a) shouldn't.
3) Congrats on finding a gamebreaking issue, but that's a vanilla TSL bug, not something we created. Don't break the rules when fighting the handmaidens on the training mat. Really!
To conclude; TSLRCM 1.6A is less buggy and gamebreaking than vanilla TSL 1.0b. That's fact, not some wil claim...