the entire philosophy of Smalltalk was to think of software artifacts as living entities. You can just find yourself in a piece of software, fully inspect everything and engage with it by way of a software archaeology. To do away with the distinction between interacting, running and writing software.

They wanted to get away from syntax and files, like an inert recipe you have to rerun every time so I think if you do away with the image you do away with the core aspect of it.

Computing just in general didn't go the direction they wanted it to go in many ways I think it was too ambitious of an idea for the time. Personally I've always hoped it comes back.

I'd include both approaches.

The thing is that the "scripting" approach, is just so much easier to distribute. Just look at how popular python got. Smalltalk didn't understand that. The syntax is worse than python IMO (and also ruby of course).