I answered my own question but thought the answer might help others struggling with these same issues.

I found the following site:

http://pascal.vanhecke.info/2005/08/...n-for-tinymce/

which has a link to download the ibrowser plug-in and instructions on how to configure it. While the download from here is setup to use the ibrowser tool, it doesn't include the plug-in. Once you install the ibrowser plug-in and configure it, you are able to insert images very easily. In addition, by using the TinyMCE editor, I was able to finally craft an email newsletter that was ceived in the inbox in the same manner in which it was sent.