I'm not a fan of flash sites for photo galleries since most focus on the flash programming and ignore the photography. Yours does have a few of these issues, but as others have said, it isn't terribly painful and can be easily fixed.
There is one thing I would definitely change other than the block transition (for this, you really should just have the photo display immediately and remove the transition completely). Right now, the pictures load so that the bottom half of the photo is covered by the thumbnail strip and the viewer has to click three times (one on the thumbnail, again on the "minimize" arrow to see the photo, and a third time to restore the thumbnails to switch to another photo) in order to actually see the photos. Either resize the photo frame so that all pictures show up above the thumbnails and not behind them, or move the thumbnails so that the current photo frame can be viewed without extra mouse clicks.