Back in about 2006 PodPress used to do this very thing, allow you to browse on your server. If you could dig up their old forums, it created a huge message of support issues. When we started writing PowerPress, we took that and a few other problems that PodPress had and eliminated them. PodPress also removed this over time, more than likely seeing how we did it they started copying what we did.
The problem was multi fold, which tied into the fact that folks didn’t understand that a FULL URL was needed, and many times the URL the server wanted to use was either not real, or not valid because the folder paths didn’t match the root URL of the site. On top of that most PHP sites (same holds true today) have very small limits on the file sizes you can upload and for good reason. The larger you allow your PHP upload size to be, the higher the risk your server is to a DDOS attack based on uploads.
We are also trying to avoid encouraging users from making major mistakes. It’s a big mistake to host you podcast media on the same server as your web site. Web sites are not designed to handle large file downloads, they need to be distributed through another server at the very least, but ideally through a content delivery network that way minimum bandwidth is always maintained to allow for in-page play streaming.
To solve many of these problems, we made the field accept URLs only so we were not steering folks into all the problems.
We do though tie PowerPress with our podcast media hosting service. If you’re looking for a simple way to upload and link to podcast media files from the same screen, we built that in and it works regardless of how your web site is setup, where it is hosted or what the PHP upload limits are on your server.