Hi Garrett,
Greg asked me to take a look at your question. You are correct, unfortunately it is not possible to use images stored in SmartVault in the Report Designer.
When files are uploaded to Method instead of SmartVault, the field containing the file can be used in the report designer to display the attached image (for example the Document field in the DocumentLibrary table). However when a file is stored in SmartVault, the field prints blank in the report designer, which it seems like you are experiencing. The only way to use images stored in Method in the Report Designer is to upload them to Method.
I have created a feature request for this functionality. I don't imagine this would be an easy modification for our development team, but I'll reply in this thread if I recieve any feedback.
Regards,
Russell