"FreeRepublic is already doing it's part to improve security by running on a Linux server. "
Linux servers won't pass the infected pictures ?
ANY web server can pass the infected files. You will happily pull it right through your firewall via port 80. Once on the disk, your operating system/applications will dictate what happens next. The exploit wasn't targeted at Linux applications/shared libraries...yet. Given all the effort at compatibility to view multi-media files, it is just a matter of time before such an exploit happens. Windows is just a much bigger target.
They can - but it's unlikely that most of the images hosted on FR would contain a virus.
One potential problem area could be in FR's Caption This Image section, where anyone could upload an infected image. But I think John R. has coded some restrictions in that feature to prevent embedding of those images in other web pages.
Most images seen on FR are actually hosted on a different server, which may or may not be running Linux.