ILA fails to display if the admin has chosen not to enable thumbnails for attached images. In the past I've chosen not to use thumbnails to save storage space on the server. However, with the availability of ILA and lightbox as a combo, significant user scrolling could be reduced. Not sure how I'd want that to work. But it doesn't work without thumbnails. :D
I'd guess it should show the default mime image if it can't find the thumbnail. I thought I may have fixed that at some point but it may have just been for non image thumbnails. I'll try to remember to take a look O:-)
That may work for the 404 error reported recently.