It is easier and better just to attach the image to your post, using the Additional Options link in the post Reply window, see image, click to expand.
That saves you having to upload to a file/image sharing site and pasting a link, it also saves people clicking on an external link to view it and imageshack.us restrict people form viewing depending on their domain having been registered.
All in all best to attach to your post.
As to your question, the image doesn't look that bad if that is the large icon view. Mine appears fine in both large and small icon format.