Gmail Labs: Insert Images Icon

Enable the new "inserting images" in Labs under Settings, and Gmail users will have the option of using the new images toolbar icon. Make sure rich formatting mode is turned on and then when you compose a new message and click on the picture icon, you can either upload photos from your computer or by entering a pic's URL.

Unfortunately, this feature doesn't bypass the whole "display images below" (which appears at the top of the email to protect you from spammers), but it does show the photo in its entirety (so your mom doesn't have to click "view"). It also allows you to move the photo around within the email, insert text wherever you want around the pic as well as change the size of the photo (size options at bottom of photo once you insert) — yay!