As far as I can tell, the API for specifying ProjectRefs did not change between 0.11.3 and 0.12.0, but projects that use ProjectRef load fine in 0.11.3 and will not load at all in 0.12.0. I've put together a minimal example here: https://github.com/crimsoncor/sbtBug that demonstrates the issue.
IMPORTANT This project has moved to https://github.com/sbt/sbt. This issue still exists to avoid dead links, but GitHub limitations prevent the original issue from being correctly preserved here. Please see sbt/sbt#536 for the full issue and to comment.