Watermarking is back, but as a plugin now! I’m pretty surprised it works, and I think it’s going to be a great way to add features without cluttering up the options and whatnot . If you’re interested in writing your own sub-plugin, take a look at watermark.php.
I think I fixed the query_posts error.
There’s now an option to replace the built-in upload tool with the Photopress upload/browse tool. I don’t love how it works, but it does seem to work.
Download it: photopress.tar.gz or photopress.zip
Update: To clarify about compatibility, I’m currently using this version with WP 2.1.2. It probably works with 2.1, but I wouldn’t expect it to work with anything earlier than that.