Interesting. I tried four browsers:
Firefox MAC - shows image on the first load.
Firefox WIN - shows image on the first load.
Explorer MAC - always only shows the link. I was aware of that.
Explorer WIN - seemed to only show the images after reloading the page.

Explorer WIN - affects the most people. Displaying them "sometimes" would also be annoying so I turned that option off. I don't know if there is a conflict with my own scripting or that's one of reasons the image display size mod was never released as final.

A consistent maximum display size is very important to me. That beta script affects all images no matter how they are added to a post. I know that Explorer MAC doesn't understand what to do so it doesn't display any image. I also know that the geeks that write the code that tickles enough electrons to make this board go, design for Firefox because it's currently the best browser out there. (Their words not mine. I don't disagree though.) As long as things work for Windows Explorer I can only assume most visitors are satisfied.