Wordpress - Photo widget like Mashget

I'm sure a lot of you know about mashget.com, an extremely well made autoblog which has gotten all of its pages deindexed now, except for the main index page.

At the right side, in the menu, there's a section which let's you choose posts by selecting corresponding thumbnail images.

Do you happen to know any free plugin or function to do the same thing?

I'm looking for a plugin which automatically grabs and resizes the first hotlinked (!) image from each post and displays it in a sidebar widget, with each image linking to the corresponding post. Similar to mashget.com.

Any ideas, tips, solutions? I'd be glad for any help.

Can anyone help me out here, please. Any ideas?