I can embed a mime encoded JPEG in an html page by saving the page from IE using the File-SaveAs menu and selecting (Web Archive, single file (*.mht)).
Renaming this .mht file with .eml enables Outlook to open it and send an HTML email.
My questions are:
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How can I embed JPEG images directly in HTML pages (no external files). Are the images just mime encoded inline in the HTML?
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It appears that this is IE specific. Do any other browsers support this functionality?
As other answerers point out, there is the concept of data URIs but it is not supported by IE before 8, which renders it pretty useless.
Also, data URIs base64-encode the binary data, increasing the data volume by 33%.
As far as I know, sadly, there is no cross-browser way to do this.