I was having this issue in 7.0.9 as well, but feel it's something that should be addressed in 7.1.
When 'Auto-confirm profile without confirmation email:' is unchecked: if a member attempts to browse the site while logged in & not yet activating through the e-mail link, many functions of the site become 'access denied' which would otherwise still be accessible to even guest accounts. This is especially true with third party modules (browse/view is unavailable).
End users are typically confused by this, I think it should be made a little more intuitive to force them to activate their account. Maybe force a banner on top of the page that says 'ACTIVATE YOUR ACCOUNT, DUMMY!'
Also, they receive an upload error when attempting to crop & save their avatar, unless they go and click the activation link in their email. This workflow does not seem very logical to me. A simple solution would be to allow them to finish their avatar even if the account is not yet activated.