<Image File="localpath"/> should work, except you won’t really be able to use that in an Each item. The localpath must be constant. This is how we determine which files to bundle into the application while packaging.
If you give me a UX example of about what you want I can probably give you an approach that can work.
In my example below I use FileImageSource with ux:Key to create resources. The {DataToResource icon} then uses the string stored at icon as the key to lookup the resource. The end result is a list of items with attached images.
Having a large amount of local embedded image assets is very common for games (e.g. equipment or items), and usually these are stored either in a database or JSON record. It will be better if somehow I can include everything in a subfolder instead of including them one by one. Maybe this will be done by the future Fuse IDE?
We will be looking at more options. But if you already deal with a DB, or a file, you might also have some build scripts on your project. UX is designed to be simple enough to emit the boilerplate part quite easily for your resources.
That FileImageSource fragment could be generated into a standalone UX file, typically a Style, and then include that in the root of your UI. All those resources are then available by name throughout the UI.