if you refactor a large project into microstacks, and replace some Outputs with StackReferences, what happens when the dependency wants to make some breaking change? Previously pulumi would take care of sequencing such that a resource exists in 2 states, old & new, before dependants are switched over to new and the old resource is deleted.

The stack references exported from a stack are an API, with the normal contract rules that implies. If you want to change the meaning of an export, you need to change the meaning in all places that use it, at the same time. Since that's usually impractical, a common solution is to add new export names and values, and to deprecate the old ones rather than reuse them.

i think a nice idea is to co-ordinate deploys across multiple microstacks with cross-references, I think I even remember reading an article about being able to hook into the

pulumi up

process you could have a hook that runs while the resource being replaced is in the "in between" state (new resource created, old one yet to be deleted) and then kick off a deployment of dependants where they will use the new output value