Here you will find a jsFiddle adaptation of the problem.
I would like to create a 3d web application in which the user is able to select an image file on their local
I also had this problem, but I had almost exact code only I was using
var map = THREE.ImageUtils.loadTexture( e.target.result );
So I had to replace that code with
var image = document.createElement( 'img' );
var texture = new THREE.Texture( image );
image.onload = function() {
texture.needsUpdate = true;
};
and that solved the problem..