Probably not since its targeting hmtl content.
I do think this is possible to have something to do with some file or .dll not being registered properly in a very similar way to which some previous IE updates could break the link for OE to open hmtl files.
Unfortunately though, I dont know enough about IE8 & .dlls to know which ones it could be affecting in this particular case for jpegs.... so I dont want to advise you on something that Im unsure about to take you any further down that path, even though I wouldn't be too surprised if thats where the problem lies.
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More clutching at straws - are you using XP?
If so, you could try restoring jpeg file associations.
** A warning before you do this, that it will have the effect of making Windows Picture & Fax Viewer the default handler for jpegs. If you have image editing software on your PC that was previously the program which opened jpgs,you will later need to reset it from within that program, so that it will handle jpgs by default.
Dougknox (a well known and trusted site for fixing various registry problems), has a repair file for jpegs about half way down his page
here. - (Restore the default associations for jpe/jpg/jpeg files)