It seems to say, that if a program uses path parameters then it won't work anymore? That's a big breaking change. Is there guidance for a workaround?

And, p.s., does it merit a major version number change?

It's actually the opposite; an existing program will have set up its own logic to decode path parameters, but now that (by default) happens automatically and you may decode path parameters twice, which is wasteful and occasionally will cause errors (for instance, if a % is encoded as %37 it will decode once to % then fail when decoding the second time (either erroring, or consuming two hex digits that follow it).

So it can be subtle.

The intention is that this decoding should always have happened, but it didn't and there wasn't a test so nobody realized for a while.