1) You need to set the new size in the preferences.
Plus! > Preferences > Conversations > Quick Icons > Size of panel
And of course make sure the option
"replace Messenger's emoticon panel with the quick icons panel" is enabled too.
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2) That option reads:
"Improve pasting operations for large text and pictures". It does not say/mean: paste the pictures or text literally into the conversation as pictures or text.
Also, if you got that description from the changelog (and I think you did), then read the sentence which comes right after that description, it explains exactly what it does:
quote:
New feature: you can now paste very large chunks of text and pictures into a conversation. Messenger Plus! detects pasting operations that are not originally supported by Messenger and, when possible, generates a temporary file to send to the contact.
And if you hoover over that option in your Plus! preferences itself, you'll see a tooltip explaning it too:
"This feature automatically generates a temporary file and sends it to your contact when a large chunk of text or a picture is pasted into a conversation."
So it's purpose is exactly to paste a file instead of flooding your contact with tons of text or sending a screenshot manually...
(However, note that Messenger itself can already paste copied screenshots as files by itself, you don't need to turn on this option for that, you don't even need Messenger Plus! Live installed for that)