I had the same issue, but it's now working great! I closed iMovie & then made copies of the photos I needed to the desktop & deleted them from the iPhoto Library. I then resaved them as jpegs back to iPhoto. Once I replaced the old ones from my timeline with the new jpeg versions, everything has worked seemlessly. Hope this helps!
I also had this problem. Simplest workaround I've discovered (if photos show but don't run on playback) is to drop the photos into the very start of your imovie project - before any other movies in the timeline. When I did this the photos appeared when the project was played. Once the photos are in this first position of the timeline they can then be dragged (or cut and pasted) to your preferred location in the timeline. I was able to leave the photos in jpg form.
Previously I could drop the photos into the preferred position on the timeline from the desktop but they would not appear when project was played.
Happy movie making.