The plugin works fine in all other respects, as far as I can tell. It is being used at the bottom of my site at http://interi.org.
The problem comes from federated replies; it appears that the plugin assumes the replies are from the same site, so they append them to the domain that the widget is pulling from.
My StatusNet instance is single-user, so all replies are from other sites. So, if my site is http://example.com/maiki, and I send a reply to http://identi.ca/creativecommons, the @creativecommons in the widget will link to http://example.com/creativecommons.
As an aside, my personal instance is in a sub-directory, rather than a sub-domain. It pulls the updates fine, but you might want to check for path when you change how the replies are handled. ^_^