Ok, I think I understand what you're telling me. In order for an image to appear in a post, it must reside on a server somewhere, and that's the purpose of the link - to tell the browser where the image lives so it can be fetched and displayed, right? In your case, the server is photobucket.
But what if the image only lives on the writer's computer? I thought a way existed where while composing a post, I could browse my computer for an image file, insert it in-line into the post, click "submit", and the image would up uploaded from my computer along with the text of the post.