Javascript – Displaying an Image in a WebBrowser Control without accessing external Files

I am using the WebBrowser Control in C# in an application to display HTML. All the data comes from a database, so I am generating a full page with Inline-CSS in Memory and sending it to the browser.

But now I want to support images, which seems to be a problem because I do not want to store the images on Hard drive, not even in a Temp Directory. I am aware of the data: URI Scheme, but that seems to be too limited.

I wonder: Can I somehow use JavaScript to dynamically generate an image, given a stream of bytes, essentially mirroring the data: Scheme using JavaScript? Or is there some other way to display images, i.e. using GDI+?

I can make some assumptions about the images if required, i.e. I can force the user to specify width and height if required, but I cannot really enforce the position, it's HTML after all. I can also force all images being in a specific format, basically anything that could help solving this.

Edit: Could I maybe abuse something like VML to display Bitmap data? I can't use Canvas or SVG as it seems (both unsupported in IE and therefore in MSHTML?)

Edit 2: VML would work, but the processor load is insane. So I'll either implement a Webserver to serve files (like cassini) or try the Silverlight approach in my other question.