Hello
I have managed to make it work with the help of this guy (leob) from the community forum of Ionic.I have uploaded a github repository with the working code. It has lots of console.log statements because I was trying to figure out what was going on and find a solution so if you download the code and want to have a check on it you can remove the log statements to make it more clear. The code is based on the article The Complete Guide To Images With Ionic (http://devdactic.com/complete-image-guide-ionic/) in case you want to have more explanation about the code.
Anyway what made the code work was the addition of a meta tag that allowed file URLs to render images on the view. You can check this : How to create custom camera plugin?
Again special thanks to leob for his valuable help, for his time and for his tips on the topic.
Github Repository: https://github.com/akarayiannis/devdactic-images/