I'm assuming if you don't turn off the WYSIWYG editor, then the HTML appears as text rather than an image. Though if its pasted into a textarea, which contains raw HTML, then when WYSIWYG is turned back on then all is good?

I'm not an expert in vBulletin, but what we need is a simple function that can paste into vBulletin. For FCKEditor it looks something like this:

function pasteWYSIWYG(text)
{
  FCKEquation.Add(text);
}

i.e. you need to find out what Javascript function you use to paste to the current cursor position. Even better would be to overwrite the current cursor position if the user selects a block of text. Next step up from that is to allow users to double click an equation and launch the editor with the equation loaded - but we can solve that another time.

If you can figure this out - I can add in the support.