Hi jbearak,
Like dustinb44, I too can confirm that the 1.0.3 plugin works fine on my wordpress 2.6.2, but not 1.0.5 (I didn’t test 1.0.4 as I ran out of time for now).
The only difference I can see between 1.0.3 and 1.0.5 is the addition of $this-> for a few of the variables (?), which I don’t think is the cause, and the changing of function from skip_password_check to override_password_check, which now compares whether $this->authenticated is true or not. I think this could be the cause, i.e., it never find $this->authenticated to be true, and thus returning $check, which is false.
PS: I’m not a PHP developer so I apologise if the term I use above is not correct.