Brent,
Anything you are doing in the text editor is modifying the underlying code. In the old editor, if you entered a value for vspace and/or hspace, it would just add the corresponding code to your text (using deprecated vspace and hspace attributes on the <img> element). Since many of our users were using those attributes, we will be adding this capability back to the editor. But I strongly want to encourage people to future-proof their content and not rely on vspace and hspace. We are adding a "Style" textbox to the image options dialog, which will allow you to enter inline CSS for your images. According to the latest HTML specifications, the correct way to add spacing for your images is to use inline margin styling -> you would enter something like "margin: 10px;" in the Style textbox. I know this means people need to learn some basics about CSS, but it is really the right way to build your content.
See this HTML reference for more info: HTML img hspace Attribute