Imbed as in.. like a html email?

Looking over the mail client I would say no. You can attach them though.
But really, Im not sure what you are talking about in your question.

IE is a Browser.
Picasa is a app for pictures.
If you are embedding then you are using either a online or off line mail
client.

In Yahoo mail I dont think so.
Whether on Linux or Windows, it matters not.

in ie with xp, i can go to my picasa pictures, copy and paste to the body of my
yahoo mail.
(html) i cant do the same with ubuntu/firefox.

I just use links to a free website. I used to use photobucket for
forums but now they have started restricting the number of photos for
threads i think a website using ggal [jalbum or a 1001 others] is a
better way to go.

In Yahoo when you hit Compose, Foreword or the like, you will see a button above
the body of the message box that says Attach Files. In the box that this opens,
brows for the pictures that you want to add.