I don’t see the option in my editor window (just enclose image url in img tags) but it would sure be a great feature to have! 
The first button is still 
is the right button, but I take it you don't get the option to upload after clicking "browse", then?
Will look into it tomorrow. But the feature is coming. Really! 
Another request: I find the page size of 10 posts to be a bit (annoyingly) on the small side.. Can this be increased , or perhaps made a setting in the prefs?
It could f* up some existing links that have the page param in them though..
This could be fixed by actually making posts themselves linkable (so people use that instead of linking to a page).
Or, otherwise, also have the actual posts-per-page setting in the page links as param...
(Is all this 'Drupal stuff', or also (a lot of) 'custom shizzle'? 
)
