Thanks for looking into this again. I have updated the plugins in my jenkins instance to sauce ondemand 1.25; ci-sauce is now at 1.17. I restarted jenkins more than once after that.
I am afraid I still have some issues with v1.25 of the plugin:
I want to run my tests on IE7/8/9, google chrome, safari, and firefox.
When I configure my tests to be run on the "seleniumrc axis", and select these browsers, I see that the SELENIUM_DRIVER variable is only injected in the environment for "Mac 10.6Safari5", not for any of the other os/browser combinations.
When I configure the "webdriver axis", the SELENIUM_DRIVER environment variable is available, except for google chrome on all browsers, which still communicates "chrome" to saucelabs, the tests are run on firefox.
Also, the SELENIUM_API_KEY is no longer injected into the environment, and thus not picked up from the ~/.sauce-ondemand file.
I have tested these findings on two separate jenkins instances.