A little update...
So now it seems that ebay has completely removed the "self-hosted" option for the gallery pic. You can see this if you use the manual SYI.
AW2K, however, seems not affected because it treats the "FTP" image as a "transfer from web url" image already - which is the only option other than "transfer from PC". No matter what, ebay is making a copy and using the copy for it's gallery image(s).
On the zooming thing.,
As it stands right now, if you tell AW2K to use ebay image hosting, there is NO zoom, no matter the pic size, but you can have multiple pics. This is odd and something Thom needs to look at since when done manually, you get the zoom for ebay-hosted pics.
If you tell AW2K to use FTP, ebay treats that as a "copy from web", and you do get zoom (if the pic is big enough). I seem to get the zoom on any pic 1000 pixels or bigger on any size, even though ebay is now recommending 1600. (Actual min after July will be at least 501 on any side)
Now, if Thom could just get ebay to handle multiple pics as "copy from web", we would could have up to 12 pics, all with zoom, instead of just the first pic.
Of course I am only talking about the gallery pics - which ebay is strongly recommending be the ONLY pics in your listing. I've been selling on ebay since '98, and if I have learned but one thing it's this - when ebay recommends something, you had better do it. No sooner had I thought that when I read from an ebay pink that listings with pics embedded in descriptions will have downgraded search placement for mobile shoppers (which is about 30% of all ebay shoppers, soon to be 50%).
They are also "suggesting" seller not use any formatting in their descriptions that would prevent reformatting for various devices (like smart phones). Translation: they will start blocking certain HTML code (they already block quite a bit). In particular, frames and any java.
I am in the process of stripping down all my descriptions in anticipation of these changes...