Sphinx fails when a po translation contains just whitespace.
If a translation in a .po contains just whitespace but is not the empty string (e.g. " " instead of ""), sphinx raises an exception while loading the file.
The code looks nearly identical in 1.2 (even though it moved to transforms.py line 302), so the error should be reproducible with 1.2 also.
The attachment contains a tiny project that demonstrates the error with 1.1.3 (and a patch for 1.1.3 that fixes it).