No, there was no image support in the original HTML. TBL wanted image tags that opened the image as a new document; Marc Andreesen and Mosaic pushed it through as an inline element.

The reason that GUIs helped so much is that you could click on a hyperlink and it'd take you directly to the page. There are often lots of hyperlinks on a page: it's very cumbersome to navigate between them with the keyboard. (Trust me, I spent a year using Lynx over a 2400 baud modem before we got a real Internet connection. ;-)). And any interface like that locks out the vast majority of potential users, who don't want to remember that 'g' lets you go to a url or arrows select or that you hit space (or was it enter?) to follow a URL.

Except Gopher and TechInfo already had graphical interfaces in 1991, on more platforms than the WWW, where you could click to get the information you wanted. I think it was the IMG tag that initiated a lot of the excitement about TBL's project. You could already browse words and images separately through existing information systems. It was putting them together that gave the WWW lots of momentum.