It's hard to tell what the problem is without looking at the current configs. Truthfully your issue that you have of the
"dir changes from <url>photo/multihost/images to <url>/var/www/lcqp/photo/multihost/images/"
seems like it is probably doing what you ask of it. Most likely the fullpath of your images originate from the path of /var/www/lcqp/photo/multihost/images/. For some reason the rewrite rule is appending the full path.
Can you post the directive for the rewrite from htaccess, then maybe we can decipher where the problem lies?
#
# /abc/def/.htaccess -- per-dir config file for directory /abc/def
# Remember: /abc/def is the physical path of /xyz, i.e., the server
# has a 'Alias /xyz /abc/def' directive e.g.
#
RewriteEngine On
# let the server know that we were reached via /xyz and not
# via the physical path prefix /abc/def
RewriteBase /xyz
# now the rewriting rules
RewriteRule ^oldstuff\.html$ newstuff.html