I've posted a workaround and some discussion here - http://world.episerver.com/Modules/Forum/Pages/Thread.aspx?id=57526&epslanguage=en.

In general I suppose there shouldn't be any issues for this functionality to support VPP as well. What's going behind the scene is that original image as stream is added to the gallery (in DB and physical image file is saved on the disk). And later using Bitmap and Graphics pbjects from System.Drawings namespace thumbnail image is generated. So more or less everything is done in-memory.

But as usual - there most probably was reasonable reason not to implement VPP :)