I just get many photos of the same dinosaur skeleton! You have to choose the folder that holds your photos. Go into the System Preferences "Desktop and Screen Saver" pane, click to the Screen Saver side, choose MovingPhotos if necessary (in "Other" at the bottom of the list), and click Options... Click the Choose Folder button. You can choose your iPhoto Library if you like; that's in your Pictures folder by default.
I'd like to see more photos at once. Click Options... as described above, and increase the number of rows and columns.
The animations seem jerky. This happens when you have more photos than the computer can deal with, especially for machines with weaker graphics (like MacBook, MacBook Air, and Mac Mini). Go into the options: you can either reduce the number of columns and rows, or move the fourth slider toward "Few at Once". This slider limits how many photos will be in motion at the same time. You may have to move it quite close to the left side.
When the photos arrange to form letters, the letters look blocky. Try more rows and columns, as described above.
What did you test it on? Tested on 10.5.2, on a PowerBook, MacBook, MacBook Air, Mac Pro, and white iMac. I suppose it should work on 10.5.1 or 10.5, but I don't have those available here.
Other questions or comments? Email movingphotos at davidmcnerney.com and I'll try to help.