Re: "[That it's] a good possibility [that] by 'in His image' the Bible means something other than physical appearance."
Genesis, Chapter 1, verse 26: "Then God said, 'Let Us make man in Our image, according to Our likeness; and let them rule over the fish of the sea and over the birds of the sky and over the cattle and over all the earth, and over every creeping thing that creeps on the earth.'" (The New American Standard Bible)
Let's look at a few of the Hebrew words in this passage.
"Let Us MAKE MAN in Our IMAGE, according to Our LIKENESS ... to RULE OVER [the other animals]."
(MAKE) asah: make, FASHION, produce, prepare.
(MAN) adam: man, human being, (or as more often intended in Torah) MANKIND (note the plural usage of "let THEM rule over...").
(IMAGE) tselem: image (usually in the sense of a heathen god), likeness, SEMBLENCE.
(LIKENESS) d'muwth: likeness, similtude, MANNER.
(RULE OVER) radah: dominate, have dominion over, rule, tread down, subjugate.
So, briefly:
Elohim said, "Let Us fashion mankind so that he rules over fish, birds, cattle, and the other creatures in Our natural creation similarly to the manner in which We would if We chose not to create mankind."
This, I think, is how the fabricators of the story viewed mankind's status in the natural order.
Peace. Ab.