It still does not work, and yes the cursor is in the desired location. When I right click and hit "copy image" and paste, it pastes the link to the image, whereas in Chrome, it would paste the image.
There seems to be a more general issue/difference between Safari and Chrome so that one allows the pasting of images on the clipboard and the other does not. If it helps, this issue was also (sort of) documented in this Reddit thread: https://www.reddit.com/r/mac/comments/3ompay/cant_paste_images_into_facebook_cha t_on_safari/?st=iv1bn4zh&sh=0772361d
This behavior is not unique to Facebook, but also occurs in gmail - another place where I would expect that pasting an image would work. It is a little bit different on gmail though - the same thing happens when copying a screenshot to the keyboard and pasting (nothing), but when I right click an image and select "copy image" then paste, an odd box comes up that says imgres.jpg, but not the image. The image does not show up if I were to send the email too.
So it isn't Facebook specific but rather some feature of Safari that does not allow the copy pasting of images into a text box. I can't seem to edit the title to reflect that, unfortunately. The question might get more traffic if I could.
Thanks so far!