This isn't necessarily the case. Depending on your circumstances, somebody with a reading of 1.2 such as yours could have their licence refused. It is generally accepted that those with a history of misuse or dependence (as classified by DVLA) may need to get a CDT level of below 1%. When I got my results through from DVLA when my licence was reissued, the letter stated below 1.6% "suggested no recent excess alcohol intake", yet other people have had letters stating below 2.1% as similar.
CJ what it may mean is that they probably will write to your GP. Had you said no to this question and then they wrote to the GP anyway, they would have known you were lying and therefore presume that you had lied on other questions also. Other people have seen the whole process dragged on because they gave misleading information which was contradicted by GP notes. The reason they ask about mental health is that there is a definite correlation between depression/anxiety and self medication/misuse of alcohol. As long as your GP notes are up to date and don't implicate you, you should be fine. Mental health issues do not necessarily mean that licences won't be issued, they just need to ensure that you aren't in the misuse/self medication category which would adversely affect your eligibility to hold a licence. Hold in there mate, I'm sure it will all be over soon!