I use 'ImageShack' for my image server (it is a free site for hosting images), then simply use the 'Insert Image' button above the comment text box to paste the "direct-link" image address which is supplied by ImageShack once the image is uploaded to the account.

I believe the new coding here at WC is responsible for the resize and bar above the image.

There are a few such sites. Here is a link to 'ImageShack' http://imageshack.us/ - just create an account and upload an image > select the 'details' button to view the image > click the 'Get Links' button below viewed image > copy direct link address > then come here and place the copied address in the 'Insert Image' text box to place it.

Note - make sure to select the 'Remove size / resolution bar from thumbnail' when uploading the image to ImageShack, otherwise you will end up pasting a thumbnail image with a black bar on top here.