Thanks. While I'm procrastinating a big move I might as well elaborate on that other issue too ;)
I guess it boils down to not having lots of plugins in the wordpress MU here at wp.com, so you need to go into the flickr account, select an image, show all sizes, select right size, copy the html-code and then paste it into the html of your current blog post.
Alternatively you can blog directly from flickr, as I'm now doing, but if you want to do something fancy, you have to edit your post in wordpress afterwards.
The approach that I'm missing is one I've seen screenshots of where you can access your flickr images in a tab next to "Upload" and "Browse All" beneath the TinyMCE. According to this , something like that was once part of wordpress.com, but got removed.