Found this when looking for a widget example project to get me started on developing something exactly like this! Works a treat.
Couple of comments:
I personally would have placed many options on the widget options screen rather than within the main XF options. This could allow flexibility if to use the widget in different areas with different display options.
I was considering a widget that consumes the WordPress RSS feed to better decouple the architecture. This version runs WP code in process, so will be tied to Wordpress updates. But it does afford better functionality to dig out category/image info, and easy to extend to use WP Post meta data too.
Nonetheless, this Widget works a trea and looks good on the front end.