Upload Images Using C#, JavaScript and ASP.NET 2.0 Client Callbacks
Athough this still uploads image file to make the direct preview happen, it allows the user to verify them before finally saving.
It temporarily uploads to server file system passing back the image url and if the user finally decides to go saving it, it then is saved in the database.
Perhaps the initial upload is not necessary anymore in Silverlight as it can directly render user selected local image file w/o doing an upload trip to the server.