That's only true if you (and only you) have the requisite OS access and permissions. Even then it's not simple to achieve as part of a standard installation process. And even if you do that to solve the security problem there may still, depending on the app, be potential issues with concurrency.

But (leaving aside the FILESTREAM option) did you look at the white paper here :http://research.microsoft.com/apps/pubs/default.aspx?id=64525
Their conclusion seemed to be that for image sizes sub 256Kb varbinary was 'a clear winner' and only above 1Mb was that true for a standalone file strategy ?

Potential issues of concurrency with a file being read? I have clients with users who concurrently read images stored in a sharepoint picture library all the time.

The white paper deals solely with fragmentation.....and many of the images I've come across are larger than 1 MB. (Most of my clients in the past have used TIFF and not JPG)

I realize there are multiple ways to accomplish this - but I still maintain that storing externally is the best bet.