Browser permissions to my desktop? That shouldn't have to do anything with this? Whole point is that the image should not have to go through my desktop, but rather directly from source to my upload directory.
Wouldn't need to call wget and why would my browser have to do this? I'm talking about PHP code running on the server. Could use cURL, fsockopen or something else. Many options. I could get the url to the image, give it to the upload tool, and it could do an ajax request to the script that would download the file, put it in the upload directory, et cetera.
Not that complicated, but yes, probably more complicated than what you have right now. Especially since you already have what you have :p
Anyways, I'm not sure I find "would make it easier for Joe Dumb to steal an image" a good reason for not adding a feature... I mean... shouldn't you just disallow all media then? Why is the image I upload from my computer less likely to be copyrighted than one from the internet? Yes, I have my own pictures on my computer, but most pictures I put on my blog are from the internet.