I have a requirement that I need to prepopulate the dialog image values with the default values given in the dialog. i.e. on the very first load of the dialog, I should see the images in the dialog with the default values given.
My component would be a cq:include in the page and not drag-dropped.
Now having explained the way the OOTB functionality works - you can create a custom Sling Resource type to address your needs. With the Touch UI, you can develop a custom sling resource type using JQuery plugins. You could use something like this for picking images: