It should be closer to 1 1/2 inches than 1 1/4 (or about 1 6/16). Of course that depends on what you have for rolling stock. Best advices it to set up the parallel curves and try different rolling stock to check the clearances by hand.
I agree with the previous posters, but do suggest that you experiment with different spacing and test, test, test. While this is extremely important for curved trackage, don’'t for get tangent (straight) trackage as well. Cramming as many tracks in a space as possible - such as in a yard or staging area - will allow more cars/trains, but, don’t forget that your two 0-5-0 “switchers” may have to get in there occasionally.