My use case is as follows (improved new version of this post):

Problem

Files:

  # Input

  content/foo.md

  content/img/diagram.svg

  # Output (out/ is a build directory that is gitignored and often cleared)

  out/foo.html

  out/img/diagram.svg

Command:

  pandoc --standalone -o out/foo.html --extract-media=out content/foo.md

Input:

  Image: 

Actual output:

  Image: <img src="out/img/diagram.svg" />

Desired output:

  Image: <img src="img/diagram.svg" />

Possible solutions

Possible solution 1 –  introduce a completely new and independent reader option extract-media-into where media paths (into the extraction directory out/) are always relative to the path specified via --output:

  pandoc --standalone -o out/foo.html --extract-media-into=out content/foo.md

Possible solution 2 – introduce a flag that changes how extract-media operates:

  pandoc --standalone -o out/foo.html --extract-media-relative-to-output --extract-media=out content/foo.md

Am I making sense? Or am I thinking about this wrong?