Sparse source replacement for crates-io registry does not work

[nickcollier]

When replacing the crates-io source with a sparse registry index it tries to use it as a git registry index

.cargo/config.toml

[source.panamax-sparse]
registry = "sparse+http://127.0.0.1:8080/index/"

[source.crates-io]
replace-with = "panamax-sparse"

Error

Error: Failed to locate crate indexes

Caused by:
    0: Failed to load index for url: sparse+http://127.0.0.1:8080/index/
    1: "gix" crate failed. If problems persist, consider deleting `~/.cargo/registry/index/github.com-1ecc6299db9ec823/`
    2: Refusing to initialize the non-empty directory as 'C:/dev/_bazel/twxsbmqd/external/crate_index/.cargo_home\registry\index\127.0.0.1-825a58b77a339ca5'