Here's waht I've discovered so far:
If you download a cache with pictures that are immebed in the description, the picutres seem to get transfered to the GC (along with the helpful emoticons ). Then, when you view the cache record on the GC and scroll down a bit, you will see a "Pictures" button that should have a count >0. If you push that button, you will see one of the pictures. If you push the joy stick left and right, you will go through the list of pictures.
If you are routing to a geocache, this can also be access when in Map mode if you hit the menu key.
This doesn't seem to work with picutres that in the cache record's "gallery" on geocaching.com. I'm still asking Magellan about that.
Kim