Thanks for following up.

I agree that it is a big security threat to open up a site for any file upload.

One suggestion, (you probably know this already) I could offer is implementing a CAPTCHA on "Insert Image" and even "Manage Images", to prevent bots from auto uploading images.

I've also heard (but don't know how true it is) that one can disguise viruses in images, but most computers today are equipped with anti-virus software so should there be such images, I guess the anti-virus would prevent a computer from harm, as long as the anti-virus updates are synchronized ofcourse.