Yeah, iPhoto is just about dead, and I’m probably a little crazy to still be using it at all, but I do and now I need to rebuild the library.
The knowledgebase article can be summed to this:
Hold down the Command and Option keys while opening iPhoto. You can’t just click the icon in the dock, you’ve got to double-click the icon in a real Finder window (or some other context that doesn’t trap the keys like the dock does).
Then select one of the repair options from the window: