<base> will not help if the file is not in the web root.
If you are able to access the image through http://domain.com/path/to/image.jpeg, then you can use the <base>
If the image is not in the web root you can add it's directory as alias in the apache config (valid only if you use apache)
Sorry guys, I should have been more clear. What I'd like to do is dev or test at a lower level directory like www/site1/site1-dev/ then move the files up to the production directory www/site1/ without having to change paths. Not just images, but anchor tags and others.
So that's what got me thinking that there's probably some way to get an .htaccess file in the dev directory make the web app think it's at root.