Cris reckons if you put an image URL it should just show the image?

I like it. 

+ maybe have the real URL below the inlined image clickable as it is now for reference / clicking. handy at times.

Auto showing images sounds great, but there needs to be a way to supress it as well. Otherwise people will not be able to share LARGE images without breaking everything.

Not only that, offensive content can freely be posted up, and people that don't care for such things will get assaulted without warning.

I would definitely like to get rid of the current edit box. It is clunky and old. I hope the one you guys are working on is better.

I'm thinking a good way to edit messages would be to just be able to press the edit button and edit it right there on the page..

whilst you're doing so a confirm/cancel button appears underneath so you can choose not to apply changes, or put them through

</myidea> 

/me still cherishes good ol' <textarea></textarea>...

Inline editting would be very sweet feature, I've raised it before. I believe it more of a time/technical issue.

Inline editing is the best option imo.

Auto Images - we had the same idea a while back but ran into a few problems with our regex when parsing image urls and excluding those that already existed in say IMG tags. I'm sure it's achieveable, but we just ran out of time and had to move on to other things. plasticshore and Pistos also raise good points, i wonder if there are any other cases where you wouldn't want an image to appear automatically?

How about when you insert an image url, it creates a small thumbnail alongside the url? Not sure if that's any better to just displaying the full image but it may address the points by plasticshore and Pistos.

Inline Editing - I agree that's probably the best way to approach editing but, as Craig pointed out, we currently don't have the resources to implement a good solution. We found implementing the edit dialog instead was a good compromise.

rhands: You could let accounts have a toggle for "show me all images / hide offensive images", then do a moderation system.  Either (1) all images considered offensive until moderated otherwise, or (2) all images considered safe until moderated offensive.