I’m seeing something similar on my test sites. (Haven’t been willing to try on production yet.)
On Media > Import Images, I do get a nice list of posts that have external images in them, but when I try to import them, the imports apparently fail, with the end result being no changes at all to my site.
On Edit Post pages, I do see a message in the sidebar listing external images, and a checkbox to import them, but checking the box and publishing changes seems to have no effect with regard to importing the images.
The plugin isn’t totally useless without the import capability, since it does link me to content which references external media, but it would be awesome to have a fix.
