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Well, problem solved. I'm just posting this in case someone else runs into the same problem... Analysis of problem I had installed iLife '05 when using Panther 10.3.9. The most recent update was to iPhoto 5.0.2. Then I had installed Tiger, ran Software Update, and finally reinstalled...

This is a follow up to a question/answer between Peter and Tom about how iPhoto mangles thumbnails and crashes a lot for a few (lucky) users. ("Question - Ilife05 & Iphoto": http://www.macosx.com/content/faq.php/q888/Ilife05-&-Iphoto.html) Personally, I was able to make iPhoto crash reproducibly...