Assuming the lizardfolk's ECL is fair to begin with, it has nothing to lose, and everything to gain by starting off with a powerful race.
If we assume a kobold rogue3 is roughly equivalent in power to a lizardfolk, then at 3rd lv, they are both equally strong, but at lower lvs, the lizardfolk has the edge in terms of strength.
How is this fair? That's why the concept of monster class progressions exist.
You're assuming it's only fair to have the PC's are always equal in power, and that I'm solving for that outcome.
The fact is, I'm not solving for that -- I'd rather do for the correct "feel" than "fair".
In AD&D, fighters were definitely more powerful than wizards at 1st level, and quite the reverse was true at 9th level. It didn't feel "unfair" to me then, and it doesn't feel unfair to me now.
It's the same thing here -- the kobold will start out much weaker than the lizardman (which "feels" right -- it's just a kobold) -- but by 5th level, the kobold is a 5th level character, a legend among kobolds, potentially casting 3rd level spells, while the lizardman is still just a meatshield with teeth (and 2nd level abilities).
In the long term, that's "balanced" to me, and it feels right.
BTW, the other "balance" I use, which generally means people don't bother with monster races, is that I treat them as monsters. The average village isn't going to allow an unknown lizardman -- or a kobold, for that matter -- inside their gates or especially their inn.
So if a player picks a lizardman for extra hitpoints, I'll tolerate it to a certain extent and won't try to nerf its stats. But the pain of not being able to find equipment that fits in treasure hordes, of not being allowed in human settlements and therefore not being able to buy equipment easily, of being shunned and distrusted by most NPC's and bringing that upon your friends, and slow advancement add up pretty soon to not make it an easy choice.
Which means, surprise surprise, I've only seen PC's pick monster races -- a lizardman and a centaur, respectively -- twice in my many campaigns.
BTW, I'd have to get a pretty hard sell to allow anything much more exotic than that. Non-humanoid adventures don't make a lot of sense to me. I'd never allow something like a ghost or a dragon. A werewolf might be interesting, but man, there'd be some serious downsides . . .