The image in my sig is actuall placed there using specific tags for that server. Leagues also have similar sig images, but you are limited to how many you can have in a sig. Custom images aren't allowed though.
The biggest issue with sigs is (go see the WoW forums for a good example) that pages take much longer to load (especially for people on dial-up). That, and a lot of people tend to abuse the privlage, usually though making the worst sigs ever. I suppose that's why it's limited to text (and approved 'user bars').