We use email. Email is received and processed by a Python script. The script stores the attached jpg image in a directory and renames it with a unique name. It then posts the entry to MT using the MetaWeblog API to create an entry with the subject of the email as the title and puts the body of the email and an img src link to the jpg in the entry wrapped in div tags. Pretty simple. It would be easier if someone added more image handling in the API. Take a look at the Python script for more details.
We pay the carrier for the transmission of the email. Wish it were flat fee, but it's by the packet. Need to find a less "intelligent" network.