Nice advice, Gary!
I had never used pure SVG images but I had to test how moodle handles them. For those browsers that support SVG or have SVG plugins installed you could also use object tags
<object data="http://www.opera.com/img/svg/circles.svg" width="200" height="180"
type="image/svg+xml"
codebase="http://www.adobe.com/svg/viewer/install/" />
or embed tags
<embed src="http://www.opera.com/img/svg/circles.svg" width="200" height="180"
type="image/svg+xml"
pluginspage="http://www.adobe.com/svg/viewer/install/" />
or iframes
<iframe frameborder="0" height="180" src="http://www.opera.com/img/svg/circles.svg" width="200"> </iframe>
That file circles.svg has code
<?xml version="1.0" encoding="UTF-8"?>
<!DOCTYPE svg PUBLIC "-//W3C//DTD SVG 1.1//EN"
"http://www.w3.org/Graphics/SVG/1.1/DTD/svg11-basic.dtd">
<svg xmlns="http://www.w3.org/2000/svg"
xmlns:xlink="http://www.w3.org/1999/xlink">
<g fill-opacity="0.6" stroke="#fff" stroke-width="1px">
<circle cx="100px" cy="50px" r="50" fill="#00f"
transform="translate(0,0)" />
<circle cx="100px" cy="50px" r="50" fill="#ff0"
transform="translate(30,50)" />
<circle cx="100px" cy="50px" r="50" fill="#f0f"
transform="translate(-30,50)"/>
</g>
</svg>
Marc Grober helped me to test different (selectable) editors some months ago and one of them - Xinha - used ASCIIMathML.js with ASCIISVG inside the script and had a limited set of svg commands http://www1.chapman.edu/~jipsen/svg/asciisvgcommands.html available. Marc has continued testing fallback scripts with other gurus like David Lippman and Peter Jipsen. Although htmlarea can't insert svg images directly future editors TinyMCE, (F)CKEditor and Xinha might be able to add svg tags with some extra plugins like media plugin (with limited access) or something similar like in http://www1.chapman.edu/~jipsen/svg/asciisvgeditor.html
Native support of SVG is incomplete for all browsers and IE will probably never support SVG without extra plugins:
http://en.wikipedia.org/wiki/Scalable_Vector_Graphics#Support_for_SVG_in_web_browsers
http://www.opera.com/docs/specs/svg/ (Opera)
http://www.opera.com/docs/specs/#svg
http://dev.opera.com/articles/view/opera-9-5-the-next-generation-of-web-s/#svg
http://www.mozilla.org/projects/svg/status.html (latest Firefox)
http://developer.mozilla.org/en/docs/SVG_in_Firefox
http://webkit.org/projects/svg/status.xml (Safari)
IE can use plugins like Adobe SVG Viewer or Renesis Player but Adobe will discontinue support for Adobe SVG Viewer on January 1, 2009
http://www.adobe.com/svg/indepth/pdfs/CurrentSupport.pdf
http://www.adobe.com/svg/viewer/install/
and Renesis Player - http://www.examotion.com/ - is not fully functional either.
I am sorry, svg images are not supported by all browsers yet. Once they are we can not support them everywhere because they might contain JavaScript.