So here's the deal. Valve definitely broke Dys. However, they did leave us an option to make the game playable again, but you will be required to make the change manually yourself.
To fix your Dystopia, in your Steam Library, right click the game and go to Properties. From there, go to the "Beta" tab, and select "Previous" (NOT PREVIOUS_UPCOMING!). Once you do that, your Dystopia should "Upgrade" (which is really and SDK downgrade).
This should fix the issues for now. I will look into merging the new SDK code into the Dystopia 1 code and release Dystopia 1.42 (no promises).
Server Admins: I recommend NOT updating your servers.
If you find any bugs or issues, please report here: http://steamcommunity.com/app/17580/discussions/0/357286119100333747/