I had originally intended on making 3 comments modes but decided later on to only do 2 (for a number of reasons) and I simply forgot to change the text from 3 to 2 (so there is no other mode). As for the images/video/etc in comments, there is nothing in the module that makes this any easier. Users can type a link and paste HTML but there is filtering on the comment text that will strip out object tags.

As an FYI, the filtering won't remove the object tag it but it will render it as text when displaying in the comment. 

I passed some info on to Barrett but you have to alter the ViewEntry.ascx to change things.