I disagree; I think the new Ajax way is really usable.
Look at 2 things:
1) wp-admin/inline-uploading.php line 81 has a test that does not allow creating of thumbnails for very large files. I don’t know why it’s there; maybe it’s trying to prevent GD from crashing. If you use ImageMagick, you can safely change this condition to “if (true)” :-).
2) In any case, GD is pretty crappy, and I suggest using ImageMagick instead. I outlined how to use ImageMagick in detail in my other post – http://ww.wp.xz.cn/support/topic/53019
