Use YUI RTE.
No, do not use the alternatives. Use the Yahoo User Interface Rich Text Editor.
It at least tries to work with all browsers
You can use it hosted at yahoo
It's nice and easy to use
It has an image upload extension already.
I completely agree with you. As a matter of fact, I'd recommend every single component from the YUI I've tried. They really deserve the merit for releasing such a good library with a nice license.
I have through YUI by Robert Alsina I have tested and it works very well.