I linked to an image in an answer.
Someone edited the answer to directly show the image. But I've always been told that hotlinking images like that was bad form. Is there an official site policy?
You're right that hotlinking is discouraged. Links are better than hotlinking; however, your links will be subject to the vagaries of the internet, and will go away with time.
If you want to make the images link-rot-proof (well, as link-rot-proof as reasonably feasible), you can upload them - StackExchange uses Imgur.com to store what you upload.
The default for uploaded images is to embed them in the post, but that will send poor RegDwigнt scrambling to find the brain bleach. So the best of both worlds (link-rot-proof, but people can choose whether to view the images or not) is to upload the image, but then edit out the exclamation mark from the image markdown code, i.e. instead of
![enter image description here] : http://i.stack.imgur.com/123abc.jpg
[enter image description here] : http://i.stack.imgur.com/123abc.jpg
(The latter is markdown syntax for a link.)