Ended up narrowing down the crash to a DirectX call by debugging at the binary in IDA Pro.
We can fix this by making the game load a DirectX wrapper dgVoodoo2.

With this fix, you no longer need to disable Hardware Acceleration, re-enable it.

1. Download dgVoodoo2[github.com]
(Scroll down until you see dgVoodoo2_xx_x.zip, download it)
Download the config
https://github.com/amooose/misc-files-random/raw/main/config.zip

2. Navigate to C:\ProgramData\PopCap Games\Insaniquarium
(Yes this is not your steam folder, the game extracts itself to this folder temporarily as a sort of primitive DRM)

3. Within config.zip, drag dgVoodoo.conf into the Insaniquarium folder.

4. Within your downloaded dgVoodoo2.zip, navigate to \MS\x86, and drag
D3D8.dll, D3DImm.dll, DDraw.dll into the Insaniquarium folder.
Your folder should look like this:


Now you shouldn't crash at all on startup or Alt-Tabbing, and can leave hardware acceleration on. Steam UI will be properly scaled as well.