Hoo boy. Was I wrong. What a bleeping mess. See  (below) for details, but my IPLM merged Libraries were a reall mess after updating to iPhoto 6. The unmerged Libraries were ok, but the process was odd. Two of them took only a few minutes to convert. One, about 3 times as large, seemed to hang. It let it run overnight , when I returned it was done. Forty images were "recovered", but in fact they were all duplicates.
Fortunately, despite my misplaced confidence, I had backups upon backups. So, I'll probably survive. I did find that when iPhoto hangs during a Library update, your best bet is to go to bed. Chances are in the morning it'll be done.
iPhoto still wreches and hangs when it comes across a corrupted JPEG. The code base for the app must be horrendous -- or the current engineers are spectacularly incompetent.
I came across some really ugly looking images, but it doesn't look like I was hit by the color space problem -- my old iPhoto 5 versions of the same images are just as ugly.
So what went wrong? I'm not sure yet. I suspect some complex interaction between the legacy of old OS X and iPhoto bugs mixed in with quirks introduced by merging my iPhoto 5 Libraries using iPhoto Library Manager. One of my many update attempts produced 620 "recovered" images, but they look like odd duplicates related to original images. I set them aside to study, but chances are I'll delete them all.
Later I did a test merge of these 3 iPhoto 6 Libraries into one new iPhoto 6 Library . This time the test image was handled correctly , but I'm still evaluating counts of images.
More importantly, I'm done with iPhoto. I deserve Pro tools. I want to use an application that gets properly tested -- because screw-ups lead to really nasty lawyers gnawing on Apple. (I'm one of the few physicians in the world who thinks that junk dog lawyers are the best solution humans can come up with to drive quality work.)
I'm so mad I'll punish Apple by spending $250 (edu price) for Aperture -- once it gets its next point update. Oh, wait, that a minute ...
PS. I had to use Smart Folders to help with some of my analysis. That's when I realized you can't sort results based on path data, and you can't easily see the path. I'd like tp put the Spotlight engineers in the same boat as the iPhoto team, and send them all to a southern island -- something just off the Antarctic coast.
 IMG_0092 is the test image. Original images is 320K
Original library (iP6 - this is correct) My guess is that that there's some global timeout that kicks in after an hour or two of failing to complete a task, and iPhoto skips to the next step.
Ancient/Modified/2002/Roll 25: 368K
Ancient/Originals/2002/Roll 25: 320K (this is correct)
Merged library (iP6)
BadLibrary/Originals/2002/Roll 25: 368K (switch original and modified)
BadLibrary/2002/10/26/Originals (this is weird, another originals?)
Merged library, different approach (iP5)
NewMerge/2002/10/26/Originals: 320K (this is correct)
As above, but iP6 with 1000 "recovered" images.
NewMerge/Recovered Photos/IMG_0092.JPG: 320K
NewMerge/Originals/2002/Roll 25/IMG_0092.JPG: 368
 As per , but now I upgraded each of the 3 iPhoto Libraries separately to iPhoto 6. Two went very quickly, one took several hours and found 40 'recovered' images (all were unwanted duplicates). Then I merged to one new Library using IPLM. The test image was now handled correctly:
AllMerge/Originals/2002/Roll 11: 320K
AllMerge/Modified/2002/Roll 11: 368K