I recently found an interesting article on a simple hack to get the existing image upload feature in CKEditor 3 enabled and functioning with a PHP server. I took his idea and applied it to the latest version, which is currently 4 with a NodeJS and Express framework backend.
It basically requires editing two files inside the ckeditor sdk: image.js and config.js.
Edit ckeditor/plugins/image/dialogs/image.js and look for "editor.config.filebrowserImageBrowseLinkUrl" around line 975. A few lines below will be "hidden: true". Change this to "hidden: false". Further down is another "hidden: true" near "id: 'Upload'", which needs to be changed to "hidden: false". Once you are done with the changes, image.js should look like this.
Next, we need to edit the config.js file to point to where the upload POST route is. Edit ckeditor/config.js and add config.filebrowserUploadUrl = '/upload'
Next, we need to create our Express POST route to handle the upload. I am taking the temp file name and prepending it to the actual file name and saving it under ./public/uploads. Since public is a default static route in Express, any uploaded image will be immediately available in the CKEditor UI. The important part here is to return a script block, instructing CKEditor to take the new image.
Finally, route it through express:
var fn = require("./upload.js");