You CAN ship v1.2.1 after v1.3.0 is live. I have tested this with the vgo prototype and it works fine (see github.com/joncalhoun/vgo_main):

    $ vgo list -m -u
    MODULE                          VERSION                    LATEST
    github.com/joncalhoun/vgo_main  -                          -
    github.com/joncalhoun/vgo_demo  v1.0.1 (2018-02-20 18:26)  v1.1.0 (2018-02-20 18:25)

Notice that v1.0.1 was released AFTER v1.1.0

What the minimum version is doing is giving our code a way to automatically resolve upgrades if they are necessary. Eg if module X requires module Z w/ a version >= 1.0.1, while module Y requires Z with a version >= 1.1.0 we clearly CANNOt use v1.0.1, as it won't satisfy the requirements of Y, but we CAN use v1.1.0 because it satisfies both.

The "minimum" stuff basically means that even if a version 1.3.2 of Z is available, our code will still use v1.1.0 because this is the minimal version to satisfy our needs. You can still upgrade Z with vgo, or if you upgrade a module X and it now needs a newer version of Z vgo will automatically upgrade in that case (but to the minimal version that X needs), but random upgrades to new versions don't just occur between builds.