I decided to switch out TinyMCE for Summernote. Summernote is open source and has everything that I am looking for in an editor. It seems to handle images by converting them into base64 and putting them inline. TinyMCE requires an image handler in order to upload files to the sever. Storing them as base64 adds some weight but it does make this application portable. Here's a test image and let's see how this is handled:
Does this work? Only one way to find out! :)
Edit: Looks like it did work.