Have you ever received a Microsoft Word attachment in your Gmail with image content? If so, you probably know the "Show as HTML" feature wasn't particularly useful. You might be happy to know that this feature, although still needing a lot of work, finally supports embedded images.
The obvious next step will be for Gmail to support viewing word document files in Google Docs & Spreadsheets for a richer attachment viewing experience -- something they have already done for Microsoft Excel documents. But until then, we have to put up with the "View as HTML" option or actually download the attachment for viewing on your local machine.