I never used 1.2 but I am giving 1.3 a try and it just doesn’t work as it is supposed to. The gallery functionality doesn’t work at all in any of the three blogs I’ve tried it on (2.8.5 and 2.8.6). I’ve tried Safari, FF, and IE. Unless you hack the plugin there is no way to control size, alignment or anything. Maybe there will be an update soon along with some better documentation.
Ben has released a BETA version of TimThumb on Binary Moon that allows you to use external images and it is working perfectly for me. You can see it in action at Nine Twentyfour and Denver Denim.
I’d still like to find a way to crop from top center but have had no luck so far.