This still has me stumped and I've gone through all the config options.

What is also strange is that it strips out jpegs but not gifs. For example logo.gif loads but header_bg.jpg and tile_back.jpg don't. Also it only affects template items and stock images are untouched.

Any pointers would be greatly appreciated as I'm trying to upgrade from 1.2.7 to 1.3.5 and I'm lost without this tool.