It looks like imgur is no longer blocking the image proxy. I didn't change anything on the forum's end, so imgur must've loosened up their limits. I guess it's not necessary to convert img images into links as long as imgur keeps working. But to prevent this from happening again, you'll get an error if you try to embed imgur images in posts from now on.
Ahh big relief…!!!
Maybe
reporting the issue to Imgur worked (I personally submitted three different tickets) and they allowed bitcointalk

Yes it’s no longer necessary to convert img tags to links.
I also think since it’s working “doing nothing” is much better option. We shouldn’t prevent imgur links, since we don’t know if imgur or imgbb or any other service will stop working again. Lets suppose imgur keeps working but imgbb stops then what?
So much simpler solution is “doing nothing”, it’s working

I'd like to create a page which recommends services for hosting forum images, and mention this in the error message you get when you try to use imgur. Other than TalkImg, which ones are good?
I don’t think bitcointalk should be recommending any of image hosting service, unless it’s owned by bitcointalk, taking over talkimg is an option. But recommending any other service is not an ideal move.