Some of the challenges I ran into, and surmounted, include preloaded images, URLs that allow you to link directly to the image, getting facebook sharing to register the image you are currently viewing when you want to share the image, zooming and unzooming large images, and saving favorites in user accounts.
Another challenge was elegantly showing the UI elements without in any way distracting from the image -- I think by fading them out after a couple seconds of mouse inactivty, we accomplished that pretty well. Left/right keys are obviously the best way to do things, but we also wanted "point and click" users to get it right away as well, so we allowed for that in the UI. I think mongout's way of doing it is pretty elegant though, with the picture of the arrow keys.
Things I still intend to iron out are the ability to mix and match arbitrary subreddits and non-reddit sources, and an integration with facebook accounts.
This has been my main side project for the past year, and I'd love to chat about any and all aspects of it :)