One thing you might try to do is to create a simple "image service" that can serve up the image in the proper format from the embedded resources.
You don't have to create web service itself, you simply create an aspx page and in the code behind you change the the Response.ContentType to be "image/png" or whatever format you prefer. This also requires a get parameter in the URL to the page itself, but that can be easily filtered. So the Page_Load method of your image service might look something like this:
Protected Sub Page_Load(ByVal sender As Object, ByVal e As System.EventArgs) Handles Me.Load
Dim FinalBitmap As Bitmap
Dim strRenderSource As String
Dim msStream As New MemoryStream()
strRenderSource = Request.Params("ImageName").ToString()
' Write your code here that gets the image from the app resources.
FinalBitmap = New Bitmap(Me.Resources(strRenderSource))
FinalBitmap.Save(msStream, ImageFormat.Png)
Response.Clear()
Response.ContentType = "image/png"
msStream.WriteTo(Response.OutputStream)
If Not IsNothing(FinalBitmap) Then FinalBitmap.Dispose()
End Sub
Then back on your ASPX page you have...
<asp:Image ImageUrl="http://localhost/GetImage.aspx?ImageName=Image1" />
Oh, and don't forget to import System.Drawing and System.Drawing.Imaging in the page.