Hi Peter,
Hopefully this info will help you determine whether this is an Image Widget plugin issue or a WP 3.5 issue. When I upload a PNG photo using image widget (and yes it’s PNG-24) it creates multiple versions of the photo. The basic version without the dimensions added to the URL does NOT have the border.
https://www.adoptabutterfly.com/wp-content/uploads/2012/12/newpromo-retailshop.png
However, the versions with the dimensions added to the URL have a border added to it. In this particular example, a blue one.
https://www.adoptabutterfly.com/wp-content/uploads/2012/12/newpromo-retailshop-270×90.png
The plugin is using the URL with the dimension numbers added to it, which is the one with the issues. If I could override it with the correct URL everything, at least for the site I’ve run into this issue with, would work perfectly.
As a work around for now I had to convert the images to JPG and have been looking for another widget alternative. I would rather have this work, and would pay to make it work, since it makes it so much easier for clients to be able to swap out images on their own.
Hope this helps. ??