Check out the updated fiddle at http://jsfiddle.net/Jtec5/381
I've added the following in the mouseover callback
template = $('<div></div>')
.hide()
.append(
$('<img>').attr({ src : imageUrl })
)
$("#slideshow").append(template);
The code creates a div and appends an img element with src=imageUrl to it. You'd need to set imageUrl variable to the url of the image you want to insert just before the template assignment. The image is added right before the current element and would show up in the following loops.