This plugin works brilliantly for putting images in posts. However, I am using the featured image plugin, and there isn't the option of including a picasa image.
After having a poke around in the php, (and noticing the admin layout) you implement the plugin using the media_buttons functionality, which is nice as you have the separate picasa icon to use pictures. However, when a plugin is looking for a standard image upload hook, it doesn't find your plugin.
Comparing it to something like Nextgen Gallery, it would appear that they have used the add_filter('media_upload_tabs'.... functionality rather than the add_action('media_buttons'.... Is there any reason why you've done it like this, or do you think it would be possible to add this standard image upload hook to the plugin easily?