On my test site, I just tried uploading an image into a post and cropping it. I forgot to hit "Save" before inserting it into the post, so it used the full image. I then went into my medial library and successfully cropped the image.
One problem - The post wasn't updated, and still uses the original image. This creates a mismatch between what's in a blog's media library and what's in use on the blog itself, which could certainly cause confusion.
Though the problem is pretty straightforward, if you wish to see the example..
Here's the post: http://dev.eharrishome.com/2009/12/image-test/
Here's the media library link: http://dev.eharrishome.com/2009/12/image-test/kitchen_after_left/
(note that the test blog's theme changes depending on which of my websites I'm testing for; I set it to the default theme for this test)