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Edit: So it work fine in replies and preview, but not on actual post...
Server crashed.
Server crash, maybe hardware fault (?).
It came straight back up after a reboot, still investigating root cause.
So as it turns out the media imbed does work for images, at least for both reddit & X (formerly known as twitter) so it's possible to use that as a stopgap measure.Another thing of note is that the media imbed feature still works as intended while it appears that it's the insert image that seems to be having issues.