Love this mod, hoping for continued development.
I am also having the problem of the down and camera keys showing over the normal buttons in version 1.2. Using a Nexus 5 with KK (the current nightly of Carbon ROM, if that is relevant). Happy to provide logs if necessary, but it sounds like you already have the relevant data.
Trying version 1.1, but I was really liking the ability to change the minimum level so they just gray out instead of being completely invisible, so will keep an eye on the available version in Xposed Installer.