There are four known restrictions in the release notes for Location Library version 1.3 (http://www.sierrawireless.com/Support/AirPrime/releasenotes/Location_plug-in_1_3.aspx). Here are some clarifications for the first two since I found them a bit badly worded in the release note:
If you attempt to put the GPS to sleep with out waiting at least 10 seconds after the GPS gets a 3D lock, the next start from sleep may fail. This means you should only attempt sleep after you have had a valid 3D lock for at least 10 seconds.
If you call gps_stop from your GPS event handler with event GPS_START_EVENT, you can cause a transition error leading to GPS_ERR_STATE_TRANSITION. What you should do is wait for the GPS to start up, then call gps_stop later on using, for example, a timer to prevent this problem.
Hope this helps anybody who has encountered these issues!