Workaround:
When adding a new remove connection, specify the "-2" option. For example, if you're connecting to "host1.example.org," click the icon to add a new remote connection, then put "host1.example.org -2" in the box. In the connection command box at the bottom of the New Remote Connection screen, the command will say "ssh -1 user@host1.example.org -2".
When you specify -2 after -1 in the SSH command, the -2 takes precedence. I tested this with a server I know only accepts protocol 2. When I connect without the -2, I get the error "Protocol major versions differ: 1 vs. 2." When I add the -2 to the server name, it lets me log in.
It's obviously not a great fix, because a great fix would be for Apple to correct what is obviously a serious security bug. However, it's an okay workaround that gets rid of the annoyance.