Luke--just tried out 1.2 with OpenOffice 3.3 on Windows 7 and it works beautifully on a text document with images inline. The only warning found in epubCheck was that the content.opf generates this line:
<reference type="toc" title="Table of contents" href="text/toc.xhtml"/>
And the file toc.xhtml is not in the ePub anywhere. But I deleted that line and it all works great now.
So I wanted to thank you for all the hard work you're putting into this!