Allow Image Block's image field to use the media file selector widget

For now, you can do this by altering the form like below:

/**
 * Implements hook_form_alter().
 */
function MY_MODULE_form_alter(&$form, &$form_state, $form_id) {
  if ($form_id == 'imageblock_add_block_form' || $form_id == 'block_admin_configure') {
    if ($form['module']['#value'] == 'imageblock') {
      $form['settings']['imageblock']['#type'] = 'media';
      $form['settings']['imageblock']['#tree'] = TRUE; // Required
      $form['settings']['imageblock']['#description'] = t('Allowed formats: JPG, JPEG, PNG');
      $form['settings']['imageblock']['#media_options'] = array(
        'global' => array(
          'file_extensions' => 'jpg,jpeg,png', // File extensions
          'max_filesize' => '10 MB',
          'file_directory' => 'images', // Will be a subdirectory of the files directory
          'types' => array('image'), // Refers to a file_entity bundle (such as audio, video, image, etc.)
        ),
      );

      // Load block.admin.inc from Block module. Needed for validation
      // in imageblock.module
      form_load_include($form_state, 'inc', 'block', 'block.admin');

      // Define our custom submit handler that save the file selected trough media
      $form['#submit'][] = 'MY_MODULE_form_submit';
    }
  }
}

/**
 * Form submission handler for the forms in MY_MODULE_form_alter().
 */
function MY_MODULE_form_submit($form, &$form_state) {
  // We can update even if it's a new block, because imageblock itself already
  // creates the database entry
  db_update('imageblock')
    ->fields(array(
      'fid' => !empty($form_state['values']['imageblock']) ? $form_state['values']['imageblock'] : 0,
    ))
    ->condition('bid', $form_state['values']['delta'])
    ->execute();
}