Fresh from the clogged tubes of teh intarwubs…
"If there is no custom field used, the script looks for the first image attached to your post. If there is one, then it grabs that image and uses it. If there are no custom fields used or images attached to your post, the script has the capability of displaying a default image that you’ve set." Hallelujah!
Ch-ch-ch-ch-chaaange-es! Looks nice, but it may confuse the more casual user somewhat.