Try the following test case: <div contentEditable="true">hello<img style="display:block;" src="http://images.apple.com/macosx/images/productheader_title.png">world</div> Click to the left of the image. You'll see the caret being places to the left of the image. Now try clicking to the right of the image. The caret is always placed to the left. You can use the arrow keys to move to the right of the image, but the mouse click won't work. This behaves as expected if the image has display:inline style.
<rdar://problem/9446343>
Created attachment 101613 [details] Patch
Comment on attachment 101613 [details] Patch r=me
Committed revision 91481.