Done. Reloaded. I've figured out the problem.
Test post 1: Jetpack only + featured image...WORKS
Test post 2: Jetpack only + featured image + image in post...WORKS
Test post 3: Jeherve custom image code + Jetpack + no image...WORKS (grabs custom image successfully)
Test post 4: Jeherve custom image code + Jetpack +featured image...BROKEN