I'm trying Microsoft's new "Windows Live Writer (beta)" this evening. I see a number of complaints already -- but considering it's beta and free -- PEOPLE! Stop. The editor is decent. Has basic formatting, spell checking, and image uploading:
The image uploading features are nice including thumbnailing, borders (such as 3D and the "photo style" shown above), size control, and even effects such as watermarking. (Oddly, the application doesn't yet support PNGs?)
Update: Apparently, there are some issues with image uploading in the beta -- at least on my MovableType configuration (I'm running in a subdirectory under the web application, and that's caused confusion in blog editors before when uploading images)
The application behaves similarly to Blogjet by opening a new window for each post.
Additionally, it works with quite a few of the major blogging engines, such as Blogger, LiveJournal, TypePad (Movable Type), Wordpress, and more. Given all of the problems that I continue to have with RocketPost, I'm going to keep watching this application.
It uses .NET WindowsForms by the way for the user interface.