Using Date Popup widget with custom format Date field I need to save a date in a very specific format: (2013-03-09\T17:01:34.1\Z to be precise). 

I also need to allow users to edit this date after it's been saved. 

I want to use the Date Popup submodule of Date to allow users to enter dates. However, it doesn't seem to support custom formats. When I enable Date Popup, I see that I lose seconds granularity, and I can no longer use custom formats at all.

Is there a way to use custom formats with Date Popup? If not, is there a recommended way of adding a popup calendar to my date field in a way that will generate dates in my custom format? Does anyone know why the developer of Date made Date Popup incompatible with custom formats?
Drupal's Date module includes a 'Date Popup' sub-module which handles date pop-up widgets. These widgets are available in the FAPI (form api) and can be configured with custom formats via the #date_format property. 

You could implement hook_form_alter() and change the #date_format property on the date field you're working with. I believe this property will support all formatting available in PHP's standard date() function.