I'm sorry to hear that is happening. Could you tell me which image you tried to store? I'm sort of suspecting the Indexed DB system I'm using in the background can't handle big images too well.
A more technical question: do you happen to see any error messages within the web console of the WME page? You can check the web console by pressing Ctrl+Shift+i at the page and selecting the Console tab in either Firefox or Chrome. It's probably best to filter the results by entering "Image Overlays". The messages about the user-info element not being available yet are normal.
I'm also starting to wonder whether I should support other ways of including an image as well. Do you guys think it would be practical if you could provide a link to an image instead? In my usage of the script I haven't really had a situation where I could just refer to an image that is available online. The big downsides I see is that the image could be blocked if it gets loaded within the WME (which will only be visible next time you try to use it due to caching) AND that the image could get removed over time on the source website.