Many thanks for the code, Ray.
I can't reproduce the original error, having tried the exact same steps once in CS4, and several times in CS5.
As regards the functionality, I am happy to say that I was right (for once) in my diagnosis in post #7:
I din't stop to think about the difference between image re-sizing (image dimensions) and image re-sizing (file-size). I thought the extension would do both.
I have updated the ticket, and am grateful for your (and Neil's) help with this.
How embarrassed am I?