Sorry. Despite advice I got to mark this thread resolved, it isn't resolved, so I changed the status back.
The problems mentioned above (blurry photos, etc.) and the lack of attached media are just problematic. I can't migrate from wordpress.com in the state it's in.
I also tried an import from my posterous blog, where it all began (and what wordpress.com originally imported pretty well), but I end up with a similar problem. About 150 images are correctly imported and attached to posts, but the rest of the links point back to Posterous.com.
So I'm left with three alternatives:
1. Stick with WordPress.com.
Pros: The site generally works well and it's managed by somebody else.
Cons: I have no control over my subscribers-by-email and the notifications send invalid links for YouTube videos.
2. Use my self-hosted wordpress imported from wordpress.com.
Cons: The media is just too messed up, and the majority of links still go back to wordpress.com.
3. Use my self-hosted wordpress imported from posterous.com.
Cons: The media all look nice (no blurry images, like with the wordpress.com import) but most of the media links go back to posterous.com.
None are good solutions. I'm stuck. (;_;)