I just tried the drag & drop functionality of images (jpeg) in the message content. In the compose window (FF4) it displays the image inline nice and cleanly but when the mail is received and viewed, there are no images displayed.
When I use the good old Add Attachment button, choose an image and select "Display inline" the image is displayed properly.
I've compared the message source and noticed the following:
The latter way of embedding images adds a Content-Multipart: related line with a new boundary (please see attachment).
In the drag and drop version, these lines are missing. I just checked, Thunderbird can display the image, Google Mail only gives me "<img src="data:image/jpeg;base64,/9j/4AAQSk" in plain text.
So is this a bug or does this feature actually work and I'm the one with the messed up setup
Oh, btw ... 7.1.0 NE on Ubuntu 8.04, Client is XP with FF 4.01. Chrome doesn't allow d&d of images into the content btw.