Linux. Nvidia GForce GTX580
Short description of error
Large images added in VSE gets scaled to render size.
If we want to keep aspect ratio we need to tick Image Offset. The image is now displayed at its original aspect and size.
We want to downscale this to reasonably fit the window so we add a Transform Effect strip.
Downscaling the image now gets cropped to the area that is inside the render area.
Effectively we can't use large images, say a logo or an image we want to do a Ken Burns effect on, in the VSE.
See attacked .blend
Exact steps for others to reproduce the error
Set VSE render to 1920x1080
Import large image (like 2500x2500px).
Image gets squashed to render dimensions
Tick Image Offset in Strip Input. Image scales to original size and aspect ration.
Add Transform strip.
Scale to 0.5
See image cropped when downscaled.