We are also seeing issues with this module after updating to Drupal 10.2. The problem looks to be related to Drupal's switch to a different HTML parser: https://www.drupal.org/node/3225468 → .
Our solution for now is to patch this module to use the old HTML parsing code from Html::load() in Drupal 10.1.8. I've attached a patch for your reference. This probably isn't a great solution but it gets us unstuck.
Also, just wanted to say thanks for contributing this module! We really needed it in order for us to upgrade to Drupal 10 and CKEditor 5.
It's great to see all the work that's been done to resolve this as it's really been annoying our users getting the wrong image selected.
Looks like it's nearly at the finish line so I'm crossing my fingers it will make it into 10.2.2! Thanks!