This is a bug. The code does not use full path when calling getimagesize() - it uses the text in the src attribute of the img tag which if it is an absolute path would be the wrong one. One cheap fix is the following:
Modify line 370 of smartresizer.php from
preg_match( "#src=\"(.*?)\"#si", $inline_params, $src );
to
preg_match( "#src=\"/?(.*?)\"#si", $inline_params, $src );
This works by stripping the leading slash from the src attribute to change it to relative path. I think under Joomla, when the php file is run, relative paths are relative to the site root.
I would also second suggestion by vdneut (1 post above) in addition to the above fix, because we do not want non-existent images to reveal information about the server.