Click on 'Convert Books.' Below the cover picture there is a checkbox that says:
"Use cover from source file"
If your book is not in mobi format, you will have to do the following...
1. Convert your book to mobi format
2. In Mobipocket Creator, load the book and add the cover you want inside
book. Note: the cover must be inside the book - not external like Calibre
3. Convert the book back to whatever format you prefer (.mobi is ok for kindle).
4. Send it back to your Kindle.
"Given the first few comments, would the easiest thing be to remove everything that's on the Kindle, re-convert now that I've added images to the metadata & reupload?"
I don't think you want to do this. The Kindle will read your modified book as a non-Amazon book and you will not be able to use any of the Kindle features that deal with Amazon books (i.e., it will think your original book and your modified book are two different books).
If your original book was a non-amazon book to begin with (no .AZW) then this won't be much of an issue - except for all the trouble that you will have to go through.
Kovid may have chosen not to implement this feature in Calibre because of the .AZW DRM issue, but I still look forward to him implementing this feature in a future upgrade.
BTW, I have both a K2 & a K3 (my personal info was out of date).