you do NOT need a plugin to do this. Havent I said this before in another thread????
1. Open wp-includes/kses.php
2. Locate the following line:
$allowedtags = array ('a' => array ('href' => array (), 'title' => array ()), 'abbr' => array ('title' => array ()), 'acronym' => array ('title' => array ()), 'b' => array (), 'blockquote' => array ('cite' => array ()),
3. Change that line to read like so:
$allowedtags = array ('a' => array ('href' => array (), 'title' => array ()), 'abbr' => array ('title' => array ()), 'acronym' => array ('title' => array ()), 'b' => array (), 'blockquote' => array ('cite' => array ()), 'img' => array ('alt' => array (), 'align' => array (), 'border' => array (), 'height' => array (), 'hspace' => array (), 'longdesc' => array (), 'vspace' => array (), 'src' => array ()),
4. Save the changed file, and upload.
The above change enables commenters to use <img src ...
and several related tags within comments. It does NOT allow any user to upload an image. Consequently, the image must already be hosted soemwhere in order to be displayed successfully.