I have made a few enhancements to the BNS Featured Category plugin. It now has an additional option of only showing Post Titles. I also added one line of inline CSS for images wider than the widget area. Version 1.1 of BNS Featured Category should be available within approximately 15 minutes at the WordPress.org Extend Plugins repository.
Here is the changelog for version 1.1:
== Changelog == = 1.1 = * added option for Post Titles only * added <div style="overflow-x: auto"> wrapper to allow for images wider than the widget area