When the watermark is applied the image it changes the intensity of the colour in the photograph.
See Brown Bear photo comparison. http://cl.ly/image/3j0a311j3109
When I tested another photo the effects were not as pronounced but still apparent. http://cl.ly/image/0C2E3x0y2h40
I then tried this same test on a different WordPress install with a different theme and I had the same problem as mention above.
I also uploaded images on the website with the same sizes with and without the watermark applied:
Brown bear with watermark:
Brown bear without watermark:
The difference is clear. I was going to use this plugin for a photographers website. But if the plugin degrades the image we can't use it.