There is not a really simple/efficient want of doing this from an embedded resource in an assembly because the "data" attribute is expecting the serialized image information, which is not the same as the string representation of the bytes of the image.  If you were using an UltraFormattedTextEditor, you could use the EditInfo.EncodeImage() method in order to get the string that you would place in the data tag, but in this case you would have to do the logic yourself:

string imageAsText = null;
using (Stream stream = this.GetType().Assembly.GetManifestResourceStream(typeof(Form1), "image.jpg"))
{
    byte[ buffer = new byte[stream.Length];
    stream.Read(buffer, 0, (int)stream.Length);

    BinaryFormatter formatter = new BinaryFormatter();
    using (MemoryStream ms = new MemoryStream())
    {
        formatter.Serialize(ms, Image.FromStream(stream));
        ms.Position = 0;
        byte[ bytes = ms.GetBuffer();
        imageAsText = Convert.ToBase64String(bytes);
    }
}

As you can tell from the code, you have to read in the image from the assembly, convert it to an image, then serialize it into a different string in order to get the expected value; as I had mentioned, this attribute is designed for serializing the formatted information so it can be read later.  The other alternative here is to not use an embedded resource and instead specify the path to the image.

-Matt