So, on this specific thread, I can definitely do it because the image settings are toggled on... if you just scroll all the way down, you'll see it says "image on," and then when you hit that post reply button, the "insert image" option pops right up in the menu at the top! But man, if the image setting is turned off, that whole "insert image" feature just vanishes from the menu entirely. Like, check out this other subforum here where images are disabled—you're totally stuck only being able to paste a direct link to a photo instead of actually posting the picture itself...
http://www.usaforums.com/showthread.php?t=955039