I need to come up with a solution for users to be able to paste an image on to a website, then upload that image on to the web server. I\'m not sure what the right solution
Rad Upload (java applet). It's not free, but it is relatively cheap.
Or this free one (via another StackOverflow question)
You can use pure JavaScript for this, assuming either Chrome or Chrome Frame. Since most other plugins or applets require a specific install action you might as well require installing Chrome Frame as that will fix quite a bit more than just pasting events.
View a live demo of a jQuery plugin that cleanly wraps the HTML Clipboard API. This demo requires the Chrome browser.