Just to piggy-back: A lot of my members are complaining that they can't just use a URL to upload an Avatar.
On my old SMF forum, we never allowed hotlinking, but we had an option to upload a graphic via URL rather than a file insert from the desktop. It made people feel comfortable. I've pointed people to Gravatar, but they seem to want the ability to do everything in-house.
If that's something that can be added, I'm all for that. I understand why you wouldn't want to hotlink for security reasons, but I'm of the school that more options to do things can make users feel more comfortable.