Bazaar has been backwards-compatible with everything from my understanding, so any changes they have made to the repository layout or network protocol they use should not be an issue regardless of what client or server versions are being used. As for the version number, the team does monthly releases, so it has nothing to do with stability and more with their timed release schedule.
Ok: so what is the minimum required version, and why is the 1.5 version installed on code.python.org not good enough (as you complained about it)?
Every time this comes up, I say "we can provide version A", and then somebody comes along saying "this is really bad, can't you provide version A+X?". This was the case always with bzr: first, 0.11 was not good enough, then 1.0, now 1.5. I wonder that if I install 1.10, whether that might not be good enough anymore 6 months after it got installed.
Please understand that I don't know bazaar at all, so I have to trust the claims that any past version that was ever in use is so bad that it absolutely must be replaced.
As for Mercurial, I have been told their repository layout has not changed since their first release and updates have been more about bug fixes and speed improvements.
Speed improvements we can ignore; for bug fixes, it would be good to know how much one can go back without hitting a serious bug (e.g. one that might break the repository).