It's really like I wrote, you can simply add text and images like you would usually using code.
Code
procedure TForm.WPRichText1MailMergeGetText(Sender: TObject;
const inspname: string; Contents: TWPMMInsertTextContents);
begin
(Sender as TWPCustomRtfEdit).TextObjects.InsertCopy(Image1.Picture.Graphic);
end;
You can insert another image, use InputString to insert some text...
But if you do so, you need to leave Contents unchanged. Also do not use Contents.MergePar or anything else inside Contents.