When you’re in iPhoto, I believe if you have the photo you want to upload selected you can right-click on it and pick “Show in Finder.” This will pop up a Finder window with your photo selected. Then, when you’re uploading to Tumblr, just drag the photo to the “browse” button.
The reason you can’t pick photos inside of your iPhoto library is because Apple’s made it a “bundle” now. Pretty much it’s to keep it from being mucked with.


