Posting this after initial discussions with quicksketch in #1407590: Media 7.x-1.0-rc3 breaks image resizing
As noted in that issue the commit in #1186434: Media field image formatter doesn't create width and height attributes. broke the ability of media images to be resized in a WYSIWYG. Custom width/height attributes added to the image (e.g. click and drag resize) are now always overridden by the media module.
After that commit (i.e. as part of rc3) the output from media_token_to_markup() returns an render $element as:
'#theme' => 'image_style',
'#width' => 1000,
'#height' => 850,
'#attributes' => array(
'height' => 85,
'width' => 100,
Where 1000x850 is the original image size and 100x85 is the resized attributes. When the image comes to be rendered 1000x850 take precedent and override the attributes.
Prior to rc3 the #width and #height properties we not added to the $element, thus allowing the height and width values in #attributes to take effect.
Question is, how to work around this, or how to overcome it?