If you look in the quick reply box, there is a button that looks like this . You click on that image, and that allows you to paste your link for the image in the box that pops up
I was wondering about that too. Is that for pictures that are hosted on an external site? I usually just want to upload my photos from my iPad.
You might have a look here: http://emptyclosets.com/forum/empty-closets-help-feedback/12043-help-feedback-resources.html