I have a quick and dirty fix.
Find the line that says something like:
$srcs = preg_replace(“#src=(\S+)#”, “src=\”http://news.google.com/$1\””, $hrefs);
and remove the URI, to change it to:
$srcs = preg_replace(“#src=(\S+)#”, “src=\”$1\””, $hrefs);
This should make the google news pics show up, but the “News Alerts” e-mail envelope picture will be broken. Unfortunately, the plugin script doesn’t have any documentation and the author’s site is down, as you mentioned, so I’m just tinkering with things.