Just adding that this is also a bug in Libre office Draw in Natty 11.04
which means that it probably affects all parts of Libre Office

There is an extension called Change Picture - 
http://extensions.services.openoffice.org/en/project/ChangePicture
which works as a stop gap however the extension doesn't use the "working" 
directory and reverts back to the user root directory meaning you have to 
navigate each time negating any time saved in not having to resize/position the 
new image.

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https://bugs.launchpad.net/bugs/761597

Title:
  libreoffice impress: cannot highlight then replace existing image by
  inserting a new image

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