I'm gathering that people find it intuative to drag pictures onto the edit window.  It should work, but it does.

Go back and edit this story.  Click on the icon above "Images", located above the text box.  Tap your fingers for a couple seconds and you'll get a drop down list of your latest images.  Click on one and it will insert it into your story as a popup tag.  You can also select a chunk of text, do the same procedure, and it will make a popup out of the selected text.

I'll see about drag & drop images....  I also think your story is going to inspire me to add "full size image" support to photographica.