Hi Doug,
With my poor memory I am not sure if this is totally correct, but at one time, about the only way you could put graphics in Moodle, especially with students accounts, was using the URL and linking to the actual graphic file method. The journal was available back then, and if I remember correctly, was dropped in the move to Moodle 2.x and then eventually, revived with just the minimum work to get it to work with Moodle 2.x, which left it with the old graphics capability. It was originally dropped because it is so similar to an online text assignment.
You could write directly to the maintainer and ask about having it modified to include graphics capability like everything else.
Personally, I had not used the journal module for a while, so I tried using it for a couple of writing assignments this year. It made me have to do quite a bit of extra work because I was forced to provide feedback by typing comments. I am used to using rubrics and audio for feedback which is much faster and easier for me than typing. I am going to drop the journal next year in favor of the regular file upload assignment with students submitting their writing as a PDF. In the just finished QA testing for Moodle 2.7, I did the test for checking that teachers could mark on PDF submissions with just about any browser and discovered that with my MS Surface Pro, it was almost like going back to editing with a red pen on paper. Works almost as well with my Samsung Note 10 inch tablet. The surface is a little better because when using the pen, it will ignore your hand resting on the glass.
