No you don't have to use a photo host Randy..... When posting a message, just click on the "Additional Options" link at the bottom of the window, and you'll see the link to add photos or files.
Once they are uploaded they are stored on our server, so no-one can access your computer via the upload - The only link is to the actual file on OUR server, NOT to the image on your machine.
I hope that clarifies things? If you have further questions, please fire away....