Yeah, such a solution is certainly best. I have a website, but since my webhosting package is very much on the low budget side, it's not the most reliable, and I find uploading with ftp a bit tedious for the occasional picture. The LJ Scrapbook interface is awful for anything that involves multiple images, but if I just want to embed one it's still more convenient to do it all in the webbrowser. Even if it comes to bite you later when you have 400+ images in your "unsorted" pile in the LJ gallery...
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