Any way to embed pictures in the body of a Gmail message?

Is there any way to send a picture in the body of Gmail message (not an attachment) without using an email client such as OE or Thunderbird?

The only reason I still use a client is because putting picture in the body of an email is the only thing I haven’t been able to do without one.

If you have two browser windows open, you can drag and drop an image from the other window into the Gmail compose box (as long as “Rich formatting”, the feature that lets you bold text, etc. is turned on).

As far as I can tell, this only works for images that are already online. You can’t, for example, drag and drop a picture from your own computer directly into Gmail; you have to first host it someplace like TinyPic.