Thanks for the plugin... however I am having some issues.
I am using WordPress 3.1 Multisite that I just upgraded from 3.01 Multisite. I have tested your plugin on both (using 1.07 on 3.01, 1.08 on 3.1).
I have activated it network wide and also on the site side and I get the same exact issue:
The IO Error goes away but it never fully uploads the image. It shows the blank progress bar but it never shows any progress and my status bar just says its busy getting data from the site.
Nothing ever resolves and I have to click out. The image is never uploaded to the media section.
I am working on a staging server that needs an SSL but client did not want to purchase a real certificate for this.
Let me know if you can help!