Runic Games has released the promised v1.2 patch for Torchlight, which is essentially a full game replacement because it replaces all of the core files and is slightly larger than the original game was. You can grab it from the official website or a mirror like AtomicGamer while you look over the patch notes:

* Fixed several issues which could overwrite saves, and protected against possible save loss. Save backups are now also generated.
* Much reduced load times for many users
* Some minor ingame performance improvements
* Fixed Needle Arc XP exploit
* Fixed Shadow Armor stacking effects
* Fixed vendor dupe bug
* Fixed various fullscreen startup issues
* Fixed broken Brink cinematic on subsequent plays
* Fixed merchant 'thief' exploit
* Fixed right clicking in inventory casting certain spells
* Fixed console not activating on Steam builds - this also fixes the fact that subsequent characters didn't see the random dungeon unlock after the first completion
* Fixed issue with Syl's cinematic not being "skippable" during first boss fight
* Fixed some DOT deaths not dropping loot
* Quest items no longer allowed in stash
* Several level fixes for a few places where things overlapped, or collision was missing, or stuck-issues cropped up
* Fixed texture/mesh/ replacement issues with mods
* You can now change difficulty level on the fly from the console without being branded a Cheater ( UNLESS you're playing hardcore )
* Fixed pet minions not awarding fame
* Fixed slow load times when mods were enabled
* Pets inherit your spell masteries
* Magic find takes the max value between you and your pet when pets or pet minions make a kill
* Visible/increasing chance of stripping enchants via enchanter. Price based on # of enchants. Variables tunable in globals.dat
* Troll pet is properly invincible
* Tree Boss could be charmed - fixed
* Fixed issue - Returning to town if you died during Ember Colossus or Medea would make them dormant on return
* weapon + shield doesn't count as 'dual wielding'
* Shimmering Scale ( and 2 other socketables ) now work properly when socketed
* Ember lance slight nerf
* Ember lightning slight buff
* Aloe Gel summon provides better healing
* Equippables properly provide bonuses to passive skills
* Fixed display issue where multiple skill bonuses on the same item would collapse into a single display
* Hardware skinning settings respected properly for pet paperdolls
* Fix for potential bad state in the henchman battle
* Enchantments at level 100 now work
* Relabeled difficulty levels, and added tooltips explaining each
* Fixed 'free spell purchase' exploit
* Socketables cannot be heirloomed
* Fix for masteries not updating certain spell bonuses until logout/login
* Summon Blood Skeleton has 11 levels now
* Various small grammar and spelling fixes

* ADDITION : Rimlights, HW Skinning, and VSynch can all be altered from the Settings menu now.
* MODDERS: Items can be set to 'always identified'