Originally I tried setting the media ID and the media path properties, but that didn’t quite work.  Eventually I found that you have to set the media ID, media path, source, and a custom attribute (“showineditor“).  I was surprised that it wasn’t easier to assign a media file to an ImageField object, but that’s easily resolved using extension methods introduced in .Net 3.5.  For the lazier among us, I’ve included a small snippet of code that does the important stuff.  This code is written for Sitecore 5.3, but should work on Sitecore 6.x with minor tweaking if some nicer methods haven’t already been put in place.  Obviously, production code should be made a bit robust than what’s below, which has no exception handling and assumes the item is already in editing mode.

public void AssignMediaItem(ImageField field, Item mediaItem)
{
    field.MediaID = mediaItem.ID;
    MediaUrlOptions options = new MediaUrlOptions();
    field.Src = MediaManager.GetMediaUrl(mediaItem, options);
    field.MediaPath = mediaItem.Paths.MediaPath;
    field.SetAttribute("showineditor", "1");
}