Compatibility with Client-side adaptive image?

Will this functionality be able to play nicely with other image manipulation modules?
http://drupal.org/project/cs_adaptive_image

Does this module simply convert the standard image html to the Data URI scheme variant?

<img src="/path/to/image.jpg>

to

<img src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAUA
AAAFCAYAAACNbyblAAAAHElEQVQI12P4//8/w38GIAXDIBKE0DHxgljNBAAO
9TXL0Y4OHwAAAABJRU5ErkJggg==">

Also, is the Data URI scheme version of the image cached in drupal?