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Firefox (same issue with several versions). edit: just tried Chrome, same issue
When I use the image icon thing, I've learned to wait for the script (the "my albums" button appears, pasting a URL before that causes the script to never complete). So I can usually paste image URLs and upload images.
However, for PNGs, I get the error message the the file format is not allowed.
But - I can download the image to my PC, then using the image icon thing, browse my device and upload a PNG. So this is more of an annoyance than serious bug as there is a workaround.