I also noticed that I can upload photos directly off my computer to Blogger, but if I do that, I'm not sure where the images are stored. Does Blogger automatically create an album somewhere with the photo? Can that photo then be re-used somewhere? If so where would the link or file be to access/use it?
This is why I prefer Photobucket. I just upload my photos, they show up in a gallery view with the links right below each photo (thumbnail). So easy and simple. Then when I type posts in Blogger, or on LiveJournal (or other forums) I can just copy and paste the link and it will show up in that post.
Anyways, I'm testing this with a photo of an oak entertainment unit that I made about a week or two ago for a client through work.
If this works you should see the cabinet below.
Link through Picasa:

Direct Upload through Blogger:
Mmmmk so let's see if this worked, and how it looks.
EDITED TO ADD: Alright, I definitely do NOT want to use Blogger. I *HATE* clickable thumbnails. Picasa it is then. What really sucks though, is that I have to manually type-in the "img src=" code for each photo. :(