Okay Gizmo that makes sense but still is the issue of the initial posting.
what i surmise is that you'd like the img tags to appear in the textarea for the just uploaded image (not for .zip, .txt etc). actually, it would probably be appended at the last saved cursor position in the editor's textarea. possibly even using ajax and act like gmail attach? maybe even auto-generate inline clickable thumbnail(s), when file dimension go over certain x,y limits?
this would be a modification to current core and (if you can handle mods), check ubbdev and even ask over there about it. (it's been done)
