Handling linking for markdown documents

This has already been discussed. There is a way (also explained in the forum) to include an image as is, but it will increase the size of your MD file considerably and make editing a lot harder.

MD is not designed for what you want, nor is HTML. If you need wysiwyg and/or images included, you might go for PDF or Word/LibreOffice/StarOffice/Pages or formatted notes. All of these formats include the images (or can include them in the case of Word et al).