Here's the situation:
Picking a file from Picasa works on my Galaxy S2 running Android 4.0.3. Doing so copies the image locally and works with that.
Picking a file from Picasa does not work on Andrew's Nexus 4 running Android 4.2.2. The Intent passed to CameraLauncher.onActivityResult contains a "NOT CACHED" URI and appears to be unusable.
However, when the Intent is being created in CameraLauncher.getImage, it is given an "image/*" type. Changing this to "*/*" provides a content URI, which is nice, but it's of the form "content://com.google.android.gallery3d.provider/picasa/item/...", which isn't usable in the usual way; FileUtils.getRealPathFromURI returns null. This case probably just needs to be handled using ContentResolver.openInputStream, which would require some FileUtils refactoring.
One more note: Picasa photos don't appear to work with the existing FILE_URI DestinationType or <input type="file" /> picker, so this issue probably belongs in its own bug.