I haven't found a better workaround, but it hasn't been a bother to me really. I just save the image and reference the hard drive location in the text RTM fields or URL.

You could Base64 encode the image to characters and dump the text in a note. :-)

From an IT perspective, if they were to add the ability to link images directly, they probably would have to store lots of images on their servers, dramatically increasing bandwidth usage, hard drive usage, and backup space required, among other things.

Thanks for that - yes - I guessed they'd probably have huge storage issues if they did that. As you say, it's not a huge issue, I was just wondering really.

You could use Google Photos (or something similar) and use the link that Google provides you for the photo.

Evernote might be an option as well since RTM integrates with it.