Really?
How the heck is that supposed to work if I'm trying to import my seed into a new version and its hashed differently?
It supports old seeds. See the oldwallet class.
I get it... However, bitcoin already has key stretching. Why stretch again in electrum (unless we are simply trying increase the 12 word seed entropy from 128 bits up to 160)?
Electrum does key stretching because it allows you to enter your own seed which may be a human generated one. Because it has no way of knowing whether a seed is human generated or computer generated is stretches them all.
I am not sure what you mean by bitcoin does key stretching. If you are referring to bitcoin core software then it does key stretching for the wallet passphrase. That's all. It has nothing to do with the public blockchain or other wallets like electrum.