I have never noticed the issues you apparently. I don't think we changed that much in the behaviour from 1.2.6..
You apparently did not get the point about precaching or did not read carefully what I posted. It is not necessary to precache. It will be slower on the first view but then images are also cached. Many hosts get overloaded if you precache them all beforehand...
Sorry, I don't know both hosts you mention. I have installed on pretty standard shared webhosting over here successfully (Germany).