What a great find! This really gets Buddypress close to a full-on FB experience!
I have a couple of comments re.t he appearance of this plug-in:
The icons for inserting media are a) too large and b) very clipart looking. I think repurposing the "Upload/Insert" icons we see when working with WordPress posts would look cool.
The "+" icon is useless, other than as a placeholder for when that changes to "X" - seems to me that it would me intuitive to remove it altogether and, instead, add a "Cancel" button that only appears after having clicked the Photo, Video or Link button.
It'd be great to have an administrative option to restrict the size of a posted image as it appears in the activity stream. Presently, uploaded pictures and videos appear fullsize and the thumbnails that get added to hyperlinks are much too large.