There appears to be a regression in XMPP handling. I have an account set from 1.1.4 and earlier, connecting to a Wildfire server at im.uchicago.edu:5223 using "Force old-style SSL" and "Strict certificate checks" options. When Adium 1.2 tries to connect, it quickly gets "Error: Read Error". Nothing appears in Console.app.
This account worked as above in 1.1.4 and earlier, and only stopped as soon as I upgraded to 1.2. When I remove my Application Support/Adium 2.0 folder and define the account from scratch, I still have the error. And iChat can connect and communicate from the same computer, so the server is not blocking me in any way. According to the server admins nothing has been changed server-end.