I cannot say what is speed difference between SSH2 and SSH1. Indeed SSH2 is slower, but it is more secure as well. So I would not dare to say that SSH1 is workaround.

With SFTP there is indeed problem with confirmation of each packet (regardless of SSH version used). However since 3.4, I've made significant changes to SFTP implementation which partially compensates this.

It seems that the PuTTY team has recognized SFTP under SSHv2 could be slow:
https://www.chiark.greenend.org.uk/~sgtatham/putty/wishlist/sftp-slow.html

Workaround is to use SSHv1 (since this updated code is already in WinSCP 3.5.0). That is, if anyone can prove that SFTP is slow....

--Keith