New image controls have been added. They can be configured in UserCP -->Edit Options-->Thread Display Options to suit your preferences. You can leave it blank which will default to the master max value (550x350), put in zeroes to disable it, or use any values up to the max. You can also set how you wish to view images larger than the allowed value.
This uses the IMG tag which has been enabled in the editor. It's the same tag used for IMAGE. If you don't see the tag do a hard refresh (Ctrl+F5) or clear your cache. Images posted using the custom bbcode [IMAGE] are not affected.