Hi,
In Handler.ashx, create a BitMap Object and Load the image from the path given through the QueryString and save it in you memory stream and convert it in to a byte array and send these byte array as the byte content to your aspx page... as shown here:
In Handler.ashx file
Bitmap objBmp = new Bitmap("[Valid File Path]");
MemoryStream ms = new MemoryStream();
objBmp.Save(ms, ImageFormat.Png);
byte[] bmpBytes = ms.GetBuffer();
context.Response.ContentType = "image/png";
context.Response.BinaryWrite(bmpBytes);
In your Aspx Page
img1.ImageUrl = "~/Handler.ashx";
That's It... Hope it is helpfull to you...