Retrieving and Storing Images Linked from Other Domains on Local Server?

(Moderator’s note: The original title was “Copy and Paste picture in post without linking to original”)

When I copy and paste a picture from another editor window it appears nicely but it links to the original location.

Is there a plugin which lets me copy and paste images in a post (like it happens in Windows Live Writer) so that the image gets uploaded to the uploads dir?

Or is that impossible in a web environment?

Reason: the one thing why I keep returning to Windows Live Writer for initial postings is the image functionality. If I could somehow make this process easier I could write some posts in the WordPress backend instead.

Update: If it does NOT exist yet, I probably will write a plugin on a hook that fires after a new or update of a post, goes through the_content, finds all image url’s that are not the same as the preferred root domain (for multisite) and if not, does a cross-load of the image (as e.g. in the swift theme) and then replaces the url with the newly uploaded image. However… since this is a basic thought someone must already have made this I just cant find it in the plugin directory (yet).

Update 2: Let me try this one:

• http://blog.milandinic.com/wordpress/plugins/cache-images/

Update 3: The above plugin works perfectly even in my WordPress Multisite environment.