Redactor plugin for Bootstrap Responsive Image
For those who find this, After some more digging into Redactor, looks like Craft overrides the original button to accommodate for sources and transforms in RichTextInput.js at  onImageButtonClick - line 261.

onImageButtonClick: function()
{
    this.redactor.selection.save();

    if (typeof this.assetSelectionModal == 'undefined')
    {
        this.assetSelectionModal = Craft.createElementSelectorModal('Asset', {
            storageKey: 'RichTextFieldType.ChooseImage',
            multiSelect: true,
            sources: this.assetSources,
            criteria: { locale: this.elementLocale, kind: 'image' },
            onSelect: $.proxy(function(assets, transform)
            {
                if (assets.length)
                {
                    this.redactor.selection.restore();
                    for (var i = 0; i &lt; assets.length; i++)
                    {
                        var asset = assets[i],
                            url   = asset.url+'#asset:'+asset.id;

                        if (transform)
                        {
                            url += ':'+transform;
                        }

                        this.redactor.insert.node($('&lt;img src="'+url+'" /&gt;')[0]);
                        this.redactor.code.sync();
                    }
                    this.redactor.observe.images();
                }
            }, this),
            closeOtherModals: false,
            transforms: this.transforms
        });
    }
    else
    {
        this.assetSelectionModal.show();
    }
}


Ended up using Retcon Twig filters plugin to add the class: 

{{ entry.body|retconAttr('img', {class: 'img-responsive'}) }}