One minor issue: the alt-text already is displayed on the thumnail, including the tags. Looks strange.
Other issue is that I found the on-the-fly thumb generation too slow, even when only about 15 images in the gallery. To solve this, I tweaked the showthumb.php a little. When a page is first loaded (typically by myself during testing) the generated thumbnail is stored on the server in a separate directory. Next time the item is loaded, my 'smartthumb.php' will first try to load the pre-generated thumbnail. It's working really fast now for all my other visitors...
Suggestions for new features:
Although the strenght of this mambot is its simplicity, the ability to add a per-image caption would be really great.
I also would suggest an option to center the thumbs. When using images with different aspect ratios, it can look a bit messy sometimes when all are lef-aligned. Or can I do this via the css?
But, all in all, a great plugin that I will use a lot on my photograhpy site. Oh yeah, did I mention the lightbox is really cool? :-)