Closes #44694

Release Notes:

- Fixed images being converted to png but retaining old format

## Before:
<img width="574" height="327" alt="Screenshot 2026-01-02 at 5 34 24 PM"
src="https://github.com/user-attachments/assets/92331939-cebc-4f53-99fc-10d5181cf87e"
/>

## After:
<img width="638" height="489" alt="Screenshot 2026-01-02 at 5 34 36 PM"
src="https://github.com/user-attachments/assets/47c05906-fa56-4a53-abd4-790c42230772"
/>

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Co-authored-by: versecafe <147033096+versecafe@users.noreply.github.com>
Co-authored-by: MrSubidubi <finn@zed.dev>