It seems that when a image (from the document center) is inserted onto a page, i

When you say "page", do you mean into a Web Content Channel with Dynamic Data? If so, then yes, the fully qualified URL of the image is used. This is actually a browser thing - when editing the channel and adding an image, IE changes the URL to be the fully qualified URL when the markup is added to the Web Content channel.

An alternative is to create a rule that generates an <img> tag, like
="<img src='/suite/doc/"&ri!imgDocId&"' alt='"&ri!altText&"' title='"&ri!altText&"'/>". Then use that rule instead of selecting a document from the Document Center. You'll need a Constant or PV to represent the image document.

I can't remember if you need to enable document inlining for this to work: forum.appian.com/.../Post-Install_Configurations

You are correct. I was referring to the Web Content Channel with Dynamic Data. Thank you Jed. This is very helpful.