This is an interesting case because I've always wondered how users interact with drag and drop ui in the browsers. Are users accustomed to the concept or does it confuse them because traditionally browsers haven't supported drag and drop? I bet there a risk for a conflict in the user's mental models!
I wonder how drag and drop would compare to the traditional approach to upload images:
1. click the Browse Image button
2. Locate images
3. Select Images
4. OK image selection
Like I said, would love to see some stats on browser drag and drop.
EDIT: Using Chrome, I tried to drag and drop an image on a web site to Pasteboard and it didn't work. Kinda obvious since it's a clipboard object but it would be really cool if it worked (not sure why you would like to host an image that's already on the web but it's the idea that counts, I reckon).