Not really planning on adding that, it's just basic functionality to improve using the [IMG] tag and images on forums. If there's an URL already just use that one between the [IMG] tags or save the images to your harddrive for uploading :)

Will this work on vB 3.7 or later?

Yep, will work for any version. There is no version related material.. however I'm in doubt now.. the login check might be changed during the versions after 3.5.4, give it a quick test.. it only involves 2 simple template changes which can be reverted in a seconden :)

Does adding this prevent uploads of other files, such as MP3, PDF etc?

I am looking for something that watermarks my photos as I will be doing live coverage from a major tradeshow in Las Vegas next week and I don't want others stealing my photos but I dont want to prevent members uploading other types of files. :)

it checks the file's mimetypes (image/jpg image/jpeg image/png image/gif image/xjpg image/xjpeg I believe) otherwise the upload will be terminated..

This compatible with 3.8.1 and also is design editable?