This is fantastic! Very simple to use. Thanks for the explanation as to why you did not give the ability to specify dimensions in the UI.
One issue I have, is that you have tied it completely to the GD image library. This is fine for jpegs, but fails with transparent pngs.
Now that IE7 and 8 recognize png transparency, I use transparent pngs in a lot of my sites. Especially product photos pulled from a database, against a non- solid color background.
I have some code I use that dynamically resized transparent pngs to produce product thumbnails, using imagemagick, but requires me to hand edit the pages instead of a cool extension like this.
Any chance you could incorporate imagemagick, and transparent pngs into this?
I realize imagemagick is not installed on a lot of servers, and the GD image library is widespread, but some hosts do, and some of us have our own servers, so we can configure them as we see fit :-)
If you do go this route, could you allow the use of the convert binary directly, instead of only the php module?