I have come across a need for this many times, often there's a simple trick you can do to get by it (i.e. setting an image as a background of an input element, rather than overlaying the image on top, or using transparent backgrounds along with z-index fiddling) however, I would definitely consider using this tool for rapidly building a layout. I like your presentation as well, clear layout with a brief to-the-point message.
My only concern would be performance, right off the bat I see a few nested for-loops in the code and am wondering what sort of performance hit you'd be looking at if you use this for several images on a single page. I didn't thoroughly trace through the code or anything, I am just thinking out loud here.
Performance is a valid concern, but so far in the tests I've run I haven't hit any real problems. If you encounter any slow downs or real performance issues, I'd love to hear about them (and hopefully eliminate them!)
My only concern would be performance, right off the bat I see a few nested for-loops in the code and am wondering what sort of performance hit you'd be looking at if you use this for several images on a single page. I didn't thoroughly trace through the code or anything, I am just thinking out loud here.