Conclusions thus far
It turns out that the "Baby-DG" image is not completely lost. It's still there in the first window and can be separated back out with a simple click of the proper icon.
So far, I am not impressed. Between the obvious bugs and quirks that seem easily fixable and the readily evident lack of functionality at the most basic level, I'm not entirely encouraged by this particular piece of freeware. Were it not for the fact that I had this review to write, I wouldn't have bothered going any further. The original program I started with, SmartMorph, was very similar, but so much more reliable and simpler to use. In the amount of time it has taken me to work through the quirks of Popims Animator, I had already morphed these two images together into a four second animated gif.