The reason for this change is because we have had many clients exporting the verticals in the wrong format to the production and then creating a mib file with mixed iPad versions.
Regarding the saving over itself issue. This is the explanation regarding the update: We have implemented a "schema conversion" in the plugin. This is important for the other task we are going to do later on but brings these problems.
When opening a file with the new plugin, indesign needs to update the data in the document. It is done automatically in the schema conversion, but the document is then treated as "not original" - you see the [Converted] thing in the name.
Once you have the file saved as, there should be no conversion necessary and you can continue as before the upgrade to 3.5. The first step will always be painful though. Sorry for your trouble.