Media + WYSIWYG or ICME + CKeditor
Pantheon is now offering Panoply, a distribution built on Panels that features TinyMCE via WYSIWYG as well as the media module already set up and ready to go.  You can register for a free account with them and test out a pre-built version of Drupal with the modules already set up in a fairly intelligent configuration.

Disclaimer: I'm a Pantheon customer, but I really do think that trying out this distro is a great way to see a hands-on example of what can be done not just upon installing a bunch of modules but after someone has taken the time to polish up the site.