Thanks for the reply. I know I can edit the HTML directly, but wanted this to be more user friendly for your average blogger.
Ultimately I wrote a tiny snippet of jQuery that selects images with the '.caption' class, wraps them with a div and appends a caption paragraph with text from the images Description field (css then styles this up as an overlay). I then copied the tinymce init static js into the theme/static/mezzanine/js dir of my theme and customized it to add 'Image with Caption' as an option in the image class drop down menu (so user can select this class from the menu to give the image the needed 'caption' class that will trigger the jquery to add the caption).
Not sure if this was the easiest way to achieve this, but it seems to work OK.