OK Thank you , that is how I thought that it was supposed to work. The reason I asked, is that is does not seem to be working for us. But I will mess with it some more and see what we are doing wrong. We sent a request to several people as a test, and they all said that it did not let them upload the photo. I was only able to upload one if I was logged in.
Is there documentation for it? Maybe the instructions on the upload page need to have a little more detail.
Thanks again!

This feature will be included in future documentation, but for now, keep in mind the block on the upload page has a block setting that will prevent people who are "staff" from uploading/updating their photo. You can change that setting if you wish. Were the people who were testing with you in the Staff role?

No. No User account and no security group.

After you select a picture, the image editor does not pop up, so that you can crop your page. Nothing happens, and then this comes up: Warning unable to upload.
Is anyone having luck getting this to work?

Looks like you found a bug. I opened a bug report on this and we'll get it fixed for the next release.

Thank you Nick!