Directory images/ was user-writable, but not group- or others-writable when I did the work described above. I have now set it user-, group-, and others-writable, but if anything Bad Behavior is behaving worse: I'm at work now and now get the same error others have reported at login.
I have restored the pre-1.5 configuration parameter, but no apparent change in Bad Behavior behavior.
I, too, find the error message suspicious. I didn't know Bad Behavior had a black IP list and have certainly not added any addresses to it since I installed the extension, so I have know idea why it would suddenly start complaining about black IP addresses it allowed before.
I will give Bad Behavior a closer look at home tonight.