I noticed the script was updated, so I tried it again now, but there's no change. I thought I'd add some info and screenshots.
The only extensions I have that edit web pages are Greasemonkey (the only script
installed is this one), Linkification (works
based on whitelist only, Yahoo Mail is not on it) and Adblock (disabled).

The e-mail with Greasemonkey off
http://img446.imageshack.us/img446/9725/ymailwi...

The e-mail with Greasemonkey on.
1st picture displays because it fits in the browser window. Links are visible.
http://img125.imageshack.us/img125/9447/ymailwi...

2nd picture is not displayed at all. Links are not visible.
3rd picture is clipped. Links are not visible.
http://img349.imageshack.us/img349/1714/ymailwi...

4th picture is not displayed at all. Links are not visible.
http://img416.imageshack.us/img416/8288/ymailwi...

This script is not usable for me. The reason is that most images I receive are wider than the screen width. In this case, they get clipped, including the links to view the full photo (on the right side). The only link that remains visible is "View" at the bottom, which leads to the annoying download page that I was trying to avoid in the first place.
I tried fiddling with some userContent.css code, but I can't find anything that works (not even overflow: scroll !important).