I like most of iPhoto 7.1, but the more I use it the more I'm appalled by the red eye "correction". Red eye in iPhoto 7.1 is a gray-blue splotch applied to anything with red pigment -- including skin.
You can see the effect in this picture of my son. I set the red eye to max and stamped away. Of course this isn't how you'd use red-eye correction, but it shows the problem. They've messed up the color detection algorithm and the edge-detection (automatic setting) has also failed. It's about as "smart" as a hammer.
Imagine how bad this looks on eyes. Anyone treated this way looks robotic.
Red eye correction in iPhoto 1 through 6 was quite good, so it took me a while to realize how bad it became in iPhoto 7. I'm tempted to imagine an angry developer deliberately sabotaging the product, but I'll put money on incompetence any day.
I would now advise anyone with iPhoto 6 to stick with it. Don't upgrade.