Aviary, a free image editing and sound editing service that I've featured on Free Technology for Teachers a number of times in the past, recently launched a free image editing tool that you can put into your own website. Aviary's HTML5 Photo Editor can be embedded into your own website.
After learning about the Aviary HTML5 editor from Larry Ferlazzo, I gave it a quick test. While I was able to get to operate correctly in demonstration mode, I couldn't quite get it right on my blog. I'm sure that's a result of something I'm doing incorrectly rather than an issue with Aviary. I'll continue tweaking it and post proper directions when I get it right. In the meantime, you can see what my demo looked like below.
Applications for Education
Aviary's new HTML5 Photo Editor could be a great resource to add to a school or classroom website. Students could edit their images on the same site that they frequent for assignments and information about their classes.
Here are some related items that may be of interest to you:
GooEdit - Image Editing in Google Chrome
7 Places & Ways to Find Copyright-friendly Images