Yes!
Steemit does help to protect against this, but it is not as 'safe' as the data actually stored in the blockchain.
I am not 100% up on how it all works, but I am pretty sure that when you create a post on Steemit.com - Steemit does import the image into their servers. You will notice that when you right click on the images inside of posts, they actually all have a Steemit.com link. They could be forced to take the images down though, so it is not really considered 'safe'.
The blockchain stores the original link to the image, but not the image itself. Like you said, if the image hosting site goes away - then the images are gone.
Thanks @timcliff. It would be interesting to write a script to traverse the Steem blockchain, since its inception, and tally the list of unique image hosting sites used by the entire Steemit community.
Then, someone could perform a risk assessment to see where we stand. This sounds like something that should get some priority investigation.
It wouldn't be good for Steemit if something like this happened and there was a hodge-podge of posts that have broken image links.
I'm also not a guru on how all this blockchain technology works under the hood. So if images were persisted on the blockchain, I wonder how that would affect witness nodes? That is, would each node have to store the entirety of the blockchain contents? If so, then how many tera/peta bytes would it take to store all the associated images from all the Steemit posts for all time? And then you also have to contend with video!
With the current way the blockchain is programmed, it would have to store everything - which would not be scalable if it had to store images, videos, etc.
They are looking into alternate ways to support it in the future though.