I don't think it replaced the 123, Digitrax still lists both:
DZ123 for $19.99,
DZ125 for $24.99. The DZ125 adds BEMF and support for 20V DCC systems (the DZ123 is limited to 18V). However, the DZ123 supports 2.0 Amp current for a brief time, while the DZ125 only supports 1.25 Amps (both are rated for 1.0 Amp continuous and 0.5 Amp total for the function outputs). That shouldn't matter in any modern N-scale loco, as stall current should be around 0.3 Amps, but it does suggest there's a bit less headroom in the design.
Oddly, the DZ123 is listed as FCC Part B compliant, while the DZ125 is not.
I've never installed either (yet), although I have several of each on the bench waiting to be installed when I get around to working on my "needs soldering" trains (I picked up the DZ123s cheap at a LHS clearance sale). I've been playing with a DZ123 connected to an ESU decoder tester (which uses an HO-sized motor) for a bunch of decoder-programming testing, with no problems.