how to send an MSWORD email?

Hi experts, I have an email database which I want to send out newsletter to. I want to send emails that have graphics, for example the pub logo. I know that there are 2 ways to do so (maybe there are more, pls enlighten me): 1. use html email with <img src="http://www.mydomain.com/logo.gif"> 2. use MSWORD to insert the logo into the email. MSWORD will then send the logo.gif as an attachment and will ALSO use <img> tags. Due to web space concerns, I cannot point the img source to the http location of the logo.gif, thus I have to use attachments. However, I only know how to include the logo.gif using MSWORD emails (currently using outlook xp), this in turn gives me another problem: how do I send the email created in MSWORD to the emails I have in the database using PHP? Please teach me one of the following methods: 1. create an email with the same logic as MSWORD does, so that I can use a web interface to create the email then send the logo.gif as an attachment. 2. send the code to send MSWORD emails not as a document attachment to ANOTHER email, but an email itself. 3. some other better methods. I really need to know this urgently, Thanks in advance.