@sullivan According to Markdown specification the image looks valid.
https://www.markdownguide.org/basic-syntax/#images-1
But it looks like not all Markdown viewers support base64 images. For example the following syntax:

Is properly interpreted by this forum Markdown engine. See the image below:

So this is not a defect in Aspose.Words, but limitation of the viewer.
As you may know Markdown allows injecting HTML syntax, so the following HTML should be handled by Markdown viewers:
<img src="data:image/png;base64,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" width="106" height="41" />
Like Markdown engine of this forum does. See the image below:

But this does not work in GitHub Markdown engine, for example.