Node translation cause image size to change across all translations

Several problems related to translation:
1. Every translation creates a new version of the image. This behaviour is not dependent on "Synchronize translations" setting in the content type.
However, all translated nodes are still pointing to the same image and not to the new image that was created with each node.
This does not make sense. Either do not create a new version or point each node to its own copy.
My view is that we should use one copy but might be a problem with alt and title attributes.

2. The more serious problem is that each translation cause the image to shrink in dimensions and the spare area gets filled with black background.
Each additional translation shrinks the image more.

Work flow example:
Original image name is apartment.jpg and its dimensions are 1600x1200.
After creating first node, apartment.jpg is resized/cropped to 640/480 (which is the desired result) and the original image gets renamed to apartment_0.jpg
Creating new node by translation results in a new image partment_1.jpg dimensions 640x480.
Both nodes now point to apartment.jpg which is 640x480
This apartment.jpg image is now very small (about 1/3 of the original size and the rest of the image is filled with black)

Every additional translation keeps reducing the apartment.jpg portion of the image.
Every additional apartment adds a new 640x480 version.

Here are links to the above mentioned images
http://www.atisrael.com/logs/apartment.jpg
http://www.atisrael.com/logs/apartment_0.jpg
http://www.atisrael.com/logs/apartment_1.jpg

I have also tried 7.x-2.x-dev version, no difference