The following code creates a UriToBitmapImage value converter.  Simply reference the converter in your databinding and you will be able to data bind an Image control to a URL and have it displayed on your WPF surface.

First, the value converter code:

namespace MyApp.Local
{
    public class UriToBitmapImageConverter : IValueConverter
    {
        public object Convert(object value, Type targetType, object parameter,
             CultureInfo culture)
        {
            BitmapImage image = new BitmapImage();
            if (value != null)
            {
                try
                {
                    image.BeginInit();
                    image.CacheOption = BitmapCacheOption.OnLoad;
                    image.CreateOptions = BitmapCreateOptions.IgnoreImageCache;
                    image.UriSource = new Uri((string)value, UriKind.Absolute);
                    image.EndInit();
                }
                catch
                {
                    image = null;
                }
            }

            return image;
        }

        public object ConvertBack(object value, Type targetType, object parameter, 
               CultureInfo culture)
        {
            throw new Exception("The method or operation is not implemented.");
        }
    }
}

Add the value converter to your project and compile.

Next, you need to reference the namespace that contains this new class on the WPF Window/Page/Control that you wish to use the converter. (You can also add your converters at the App level.)

xmlns:loc="clr-namespace:MyApp.Local"

I added the UriToBitmapImageConverter class to the MyApp.Local namespace.  Thus, I needed to add a reference to the CLR namespace in my XAML in order to use the converter.

Next, you need to add the converter to your XAML page’s resources:

   <Page.Resources>
        <loc:UriToBitmapImageConverter x:Key="UriToImageConverter" />
   </Page.Resources>

Here I used Page.Resources because I am adding this converter to a WPF Page.  It would be Window.Resources if you are working with a WPF Window or UserControl.Resources if you are adding this to a UserControl.

Now, simply data bind your image:

<Image Margin="8,7,4,8" 
      Source="{Binding ImageUri, Converter={StaticResource UriToImageConverter}}" 
      Stretch="Fill" d:IsHidden="False"/>

In the Source attribute I am data binding a URL / URI which is of type string.  This string is then passed through the UriToImageConverter and output is a BitmapImage object that downloads the image dynamically and displays it.

If I have some extra time, or requests, I will build a sample application to demonstrate.