In the past this rebuild feature did not have an option to rebuild without watermarks. So if you had images that were imported from other programs or watermarked in earlier versions of IPgallery, a second watermark would be applied over the first, irreversibly damaging all the images in the gallery. I'm hoping this has changed as I would characterize this as extremely negligent on the part of IPS (especially in light of the fact this was pointed out for years and nothing was ever done about it).
And yes just having a thumb and a larger view should be considered the most basic gallery functionality and any other configuration (multiple images) should be options in the software.
To be honest, with the number of years that have passed with the gallery ranging from a buggy mess to a complete disaster, I'm losing hope that IPS can actually create a reasonable gallery program, which is baffling considering everything else they make is pretty good.