I got this to refresh the image only, BUT, it seems that if you don't refresh the image and submit, it works as expected...
If you refresh the image 1 or more times, and submit (even with the correct captcha code) it says your captcha code was not correct.
Seems like when the page loads originally it "knows" the captcha value. When you refresh it without refreshing the page, this creates a mismatch and it's then impossible to submit the right captcha value...not sure but I can't get this to submit after I've refreshed the image.
So be careful using this technique - hopefully this will be a built in feature in version 2.