The best way to show error messages for image upload is to show an image upload progress indicator. An error message is helpful once something has gone wrong, but if a user has chosen a ridiculously large image or has restricted upload speeds they will require Visibility of System Status.
Here's an example of a progress indicator modal being used with TinyMCE. An advantage of using a modal instead of notification in the rich text editor is it will also signify to the user that they shouldn't attempt other actions or navigate from the page.
