Insert Pictures in Cells with the IMAGE Function

I do not know of any way to get Excel to do that.

and while much of this is not about =IMAGE(), it does, like your request  indicate some of the problems with usage that could well be addressed as improvements to the function, and other actions within Excel
and it seems that (on my system) Excel format row and column to autofit usually needs refreshing when data is 'managed' 

Maybe insert metadata from a folder to get the list of the folders images files

then select the filename and paste? insert a link to get bulk data 

having used an app to bulk create thumbnails of the images in the storage folder

that being a possible way to not have loads of multi-megabyte images in the workbook, so taking up loads of space, lots of I/O time and massive amounts of RAM.

With, maybe a macro to call the appropriate image display app to show the full image, and allow it to be manipulated, and emailed, displayed, or printed.

Basically - seems that the thumbnail option and an improved autofit (with limited cell size as part of the option) is going to be needed with the =IMAGE  change to use a partition letter, and/or maybe access to OneDrive storage folders within that facility -
having the Personal Onedrive facility allow a partition letter to be set to point to the users, or linked Onedrive store.

There is the copy image (shift&mouse copy) of a range that would include a cell with the picture? and then shift&paste to get that attached to a cell 

That attached entry will be sorted with the cell, but still does not autofit.

So - looks (to me) as if you will need a specialist App, or to use some VBA  and/or powerquery do do what you want..

Then there are the added entries that go with a file ( right-click on the column header in Explorer and add some of the other values to the display

WinWord allows 

Insert Object fromfile, link, show as icon - with the icon selectable from a dll - 

(build a .dll with thumbnails of the images in the folder?)

It shows as the icon, with a text entry below and you can have that in a table  

note the text entry is just that  the link is hidden - and will change to the new fullname  if you use the link and do a saveas 

And you can sort on a column containing the name

(or fullname using shift and rightclick on the wanted folder or files shown in an explorer tab)
gets fullname into the clipboard

But for Excel - that seems to paste the linked entry into excel as a floating item within the worksheet - rather than within a cell