Haven't replied but here is how i solved the problem, but it is a bit hacky imo think it uses something I found in another forum posts that i can't find now:

I used this to wrap up the image data as byte[]

public class HttpPostedFileWrapper : HttpPostedFileBase
{
    private Stream stream;
    private string contentType;
    private string fileName;

    public HttpPostedFileWrapper(string fileName, string contentType, byte[] imgData)
    {
        this.fileName = fileName;
        this.stream = new MemoryStream(imgData);
        this.contentType = contentType;

    }

    public override int ContentLength
    {
        get { return (int)stream.Length; }
    }

    public override string ContentType
    {
        get { return contentType; }
    }

    public override string FileName
    {
        get { return fileName; }
    }

    public override Stream InputStream
    {
        get { return stream; }
    }

    public override void SaveAs(string filename)
    {
        using (var file = File.Open(filename, FileMode.CreateNew))
            stream.CopyTo(file);
    }
}

I then created an UmbracoApiController to get access to MediaService with the following method:

   [HttpPost]
    public int CreateImage(Image image)
    {
        var newImage = mediaService.CreateMedia(image.Name, image.ParentID, image.MediaType);
        HttpPostedFileWrapper httpPostedWrapper = new HttpPostedFileWrapper(image.ImageName, image.ContentType, image.ImageData);
        newImage.SetValue("umbracoFile", httpPostedWrapper);

        mediaService.Save(newImage);
        return newImage.Id;
    }

The Image obj contains the data needed to create the image (ContentType, Name, Data etc.)

For ~4mb + images u need to fiddle with your web.config.