Originally Posted by Lazer
If I recall an ePub actually places the photos in a separate folder with links for the final product to access -although it LOOKS as if the photo is embedded in the endproduct.
That's also the way it works in Mobi - the images are separate, and linked to in the text with <img> tags - exactly the way it works in ePub.
I've converted dozens of illustrated books to and fro between ePub and Mobi format. The conversion works just fine, both ways.