Image Editor Not Working on 3.0 Mu running on nginx


I'm running WordPress 3.0 in mu mode on Ubuntu 10.04 with nginx and php5-fpm. No matter how much I try - image editor fails to work on my platform and it seem to be due to the way nginx pareses URL.

Since edublogs is one of the most successful models I know iff ysing MU besides that also runs on nginx - I checked that feature and found it to be disabled.

Anyone knows how to easily disable Image Editor for all blogs in network on WordPress 3.0 Mu, how to remove that option from the view completely? I can probably dig through the code and find soltuion by hacking the files but would love to avoid it if there is a better solution.