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As long as the image is not included within the <p></p> tags you should never have a paragraph ‘interrupted’ halfway for the image…it should complete the paragraph, then display the image.
Otherwise, I try and place the image slightly after the scene depicted by the image first gets discussed. That keeps the story flowing smoothly, with a natural pause to view the image.
I don’t worry too much about white space between pages in a reflowable book. You just do the best you can. What absolutely drives me nuts is white space WITHIN a paragraph, or sentence, caused by book coders forcing justified text. There are only a few devices that handle auto-hyphenation tolerably well, and those rivers of white space, especially on small profile devices - like phones, is very distracting and yanks me right out of the story! Extra space at the bottom of a page is relatively unnoticeable.
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