Hay @muksihs,

The code reads like there is a signing requirement for uploading pictures. The private posting key. Am I reading that correctly?

Ohh I totally missed to explain this part. Sorry for that - I will edit the post later on when I am at home again.

The quick answer is yes. They only allow users with a steem account to upload images.

Also is there an acceptable use document on using their images API anywhere?

You can check the readme:
https://github.com/steemit/imagehoster/blob/master/README.md

At the beginning it was totally not clear to me 🙈 But now that I know how it works I would say the documentation is really minimal, but its correct.