I get the problem with Chrome and IE for some reason as well. Usually its an "IO Error". With IE its less severe than Chrome. I never found a solution and it apparently happens with Yahoo's flash uploader too.
My recommendation is to use firefox to mass upload, and if a fix appears I'll update the flash script and let everyone know.
@stefan-te, maybe in the future but right now I'm focused on growing the site and keeping it fast. If we have alot of excess bandwidth later on I might enable hotlink on a per site basis. For example let blogs host their graphics(header, post icons, etc) on imagezilla.net and let them hotlink it.
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