No, it's Blogger giving us a way to IM, yeah IM, photos directly to our blogs. Tear.
It will automatically resize and add captions. No HTMLing or hosting problems. If I could, I'd hug the team at Blogger for helping me live up to my own site name. You can even post screen shots.
Sure I may be at work until 10 on a Friday - but knowing I get to play with this nifty feature soon makes my day!