AFAIK, the img tag is pretty basic and wants to see a recognised extension: which I imagine will be limited to .jpg, .png and .gif (maybe it'll do others, but I don't have a list handy) and doesn't have the logic to parse page links. Which is a bit inconvenient, but that's what we have to work with for the time being.
It will at least automatically link URLs, but the img tags don't work except in the above cases.
