If you use the default tt_news category menu with plugin.tt_news.displayCatMenu.mode = nestedWraps, you may notice that category images are not rendered and there is no way to render images in this mode.
This extension uses XCLASS to overwrite the default method for generating the nested category menu. It adds the category image to the output and uses the TS config plugin.tt_news.displayCatMenu.catmenuIconFile for image rendering
To set a wrap around the rendered image, use the TC config plugin.tt_news.displayCatMenu.catmenuIconWrap
The extension is hosted on Github. Please report feedback, bugs and changerequest directly at https://github.com/derhansen/sf_ttnews_catmenu