A related problem is that when using standard image links, the right click menu to open the image in native app is missing.

So if you choose to stick with compatible link formats, large images become unreadable when they are resized down to fit Obsidian’s view, with no way to open them at full size.

edit: added this as a bugreport

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Agreed!

Wondering if there has been any update on this.

Just came across this issue when trying to view notes in gitlab. All images are contained within the vault, in a “_attachments” folder, however gitlab doesn’t understand the obsidian method of specifying the image path.