I love responding to my own posts.

Seriously, I hope this helps someone.
I am certainly no php guru, but I think I found the problem with version 2.3’s thumbnail generation code. Specifically, on line 162 where the thumbnail filename is created by concatenating several elements, I think there’s a bug.
Currently, in version 2.3 of AutoGallery.inc.php, the code is like so:
162: $params['tnpath'] = $gallerypath . '/tn_' . $path_parts['filename'];
The problem is, $path_parts was declared only a few lines before in line 157 as:
157: $path_parts = pathinfo($file);
While $path_parts does contain something, $path_parts[’filename’] does not (at least on my system).
The fix therefore is to change line 162 to read:
$params['tnpath'] = $gallerypath . '/tn_' . $file;
With this change made, the code does indeed create multiple thumbnail images AND returns a different filename for each image (rather important).
Hope I’m on the right track here.