KompoZer is a complete web authoring system that combines web file management and easy-to-use WYSIWYG (what you see is what you get) web page editing.
KompoZer is designed to be extremely easy to use, making it ideal for non-technical computer users who want to create an attractive, professional-looking web site without needing to know HTML or web coding.
KompoZer is also open source, that means it's free to distribute, free to download etc.
When I first saw the title of your post I was thinking you wanted to encode JPG's into HTML using Base64.
If they said write it up in HTML and your doing it in photo-shop then they will not be best pleased when they want to edit the newsletter and find they cant, because its been converted from an image!