After hitting the Reply button, click on the "Use Full Editor" button below and to the right of the Quick Reply editing screen. This will bring up the menu bar that we are pretty used to except for the upload picture button which is not there.
Scroll your screen down and look in the "Post Options" box and click on the underlined New Picture Uploader which will spawn a box for you to browse to the picture you want to select. From there you can pretty much figure it out.
Unfortunately the new format does not show a preview if you click on the "Preview Changes" button