Transparent Cover Art Output While Paused
The "Alternate output while paused" setting only applies to the text file output. If you set it to output a space, it creates a blank text file which effectively removes the text from a "Now Playing" overlay without hiding the source.
However, there is currently no such option for the "Save Album Cover to file" setting. I recently made use of the cover art on a few scenes and quickly found myself wishing there was a way to automagically hide the cover art while Pretzel was paused.
The best way in which I can think to implement this would be for Pretzel to add a toggle setting to output a 100% alpha transparent image in place of artwork while paused.