I haven't seen this specific issue raised so far:
When I select an image from the Media Library Tab of the Uploader, and choose the "Thumbnail" option I still end up with the full sized version of the image in the post. The uploader has clearly created the thumbnail images as I can see 150x150 and 300x300 sizes in the upload folder on the FTP server.
Beyond that, after a certain point, the media uploader just seems to give up completely. Clicking "Insert into Post" has no visible effect.
"Code is Poetry", eh? Clearly our friends at WordPress were thinking of Vogon Poetry.