If you're having problems, definitely go back to 1.2.6.
To be clear about the current issues with 1.2.6: the only functionality that has problems is the new functionality added with regard to the handling of "Non-MO" mods (i.e. stuff installed physically in /Data, including the vanilla/DLC content)
To put it simply, 1.2.6 is basically ignoring the custom modlist priority you assign to Non-MO mods, such as Dawnguard, Dragonborn, HearthFires. The issue is that it's often loading those files before all other mods.
So you might have DG, HF, DB down at mod priority position 10 or something, but in fact it's treating them like they're before priority 0.
But remember that that is exactly how MO always used to handle them, in every previous version! So you've lost nothing by using 1.2.6 versus 1.2.1 or 1.1.2. All that's wrong is that MO lets you put those Non-MO mods higher in the priority, then ignores that.
(In fact, to be precise, it only ignores it with regard to loose file mods. So if you put DG at priority 5, and priorities 0-4 all contain BSAs, then it's working OK. But if there's a mod that has loose files that's lower priority than a Non-MO mod, the loose file will still overwrite the Non-MO mod, ignoring the priority ordering. That's misleading and unintended, but is no different to what happened in all previous versions of MO, where the 'Non MO' mods, i.e. Dawnguard, Dragonborn, etc, were always loaded first, before any MO mod. )
TLDR: Just use version 1.2.6.
Ideally you should also follow the changelog advice which is to: [*]not extract the BSAs for the Unofficial Patches [*]have your Non-MO mods (and their associated Unofficial Patches) starting from Priority 0 in your modlist; as per priorities 0 - 10 on this screenshot. (Disregard the rest of the mod ordering in that screenshot - priority 11+ - as it's not necessarily aligned with STEP.)
But even if you do have other mods before USKP and DG and so on, that's still no different to the setup you had when you used MO 1.1.2 or MO 1.2.1. So it's not a big deal at all.
The advice on STEP was meant to simplify things for users who wouldn't read the changelog, and ideally to prevent users from upgrading from 1.1.2 (or 1.2.1) at all until the current (minor) issues in 1.2.6 are resolved. But if you're having problems with 1.1.2, you absolutely can and should just use 1.2.6 because you're really not losing anything compared to 1.1.2 (quite the opposite.)
