I don't know. (I'm just the messenger.)
I assume Colorado LP members nominate & select candidates at a state party convention (the same way the national LP nominates & selects POTUS candidates). If so, then presumably, if enough members in attendance at such a convention felt that the Republican candidate was sufficiently libertarian, then they would just move to forgo the usual nomination & selection process for that particular office - or they might go ahead and conduct the process, but vote for NOTA ("none of the above") if anyone did try to win the nomination. Alternatively, perhaps it could involve a cross-nomination, with the Republican candidate also receiving the Libertarian nomination (though it may be that such a candidate would have to explicitly seek both nominations.)
As far as I know, they still do have that ability. No one can force them to vote otherwise than they wish (or prevent them from voting on the matter at all).
The Kentucky LP has already done exactly the same sort of thing by declining to waste time & resources by running anyone against Thomas Massie. This Colorado agreement just seems like a more formally-stated version of the same thing, with an explicit acknowledgment of the policy by the Republicans added in. IOW: The Colorado LP is saying to the Republicans "if you run some people like Massie, we'll try not to run anyone against them" and the Republicans are saying "okay, we'll try to run some people like that, then". As suggested by what I said previously, I assume that the question of whether the Republicans are actually running "someone like Massie" (or close enough to suit them) would be decided by the members at convention, with their decision being indicated by whether they end up actually nominating someone or not.