I opted into the client and reproduced it so I posted on the Steam Beta forums which is about the best I can do. Hopefully Valve sees it before the client is promoted to stable.
It seems like it isn't loading the mod's custom binaries for some reason when launching the mod through the Steam library (I get error "could not load library client".)
Interestingly, launching through the command line like so still does work:
"c:\Program Files (x86)\Steam\steam.exe" -applaunch 218 -game "C:\Program Files (x86)\Steam\SteamApps\sourcemods\gesource"