iPhoto was crashing every time I ran the rebuild procedure. In the console log, I found this entry:
XXXdbg : replacing an array type field not supported yet.
I did a little investigation and followed a hunch. Suffice to say that you will get this error if you include the ( and ) characters in your photo titles; i.e. the names of the photos.
Mac OS X Hints
http://hints.macworld.com/article.php?story=2005021508470078