Showing images in edit mode has been requested few times.
But specific proposal from @brian23498324 (moved to post above ↑) seems to be the one best suited for editing mode. It would facilitate workflows like keyboard-only navigation/editing due to showing all “source code”. Images shown between lines would simply be skipped by the caret (= text cursor).
Note that the conclusion above is based only on reading the other requests, I did not read comments under those requests if there are any good ideas.
There should also be hotkey to toggle this off when we want to see as much text as possible.
For showing images “instead of text (markdown code)” as requested in the other requests, there is already request for WYSIWYG and [existing preview mode as current workaround].
I personally would merge following requests into your one [i.e. the one from @brian23498324] and sum up the likes.