Magento – Magento 1.9.3.4 : Change favicon icon

Why would you mix the two? I like to think that whatever is under media is admin-controllable while everything that is under skin is only controllable by code. This is the reason for which you'd usually grant write access to the web server only to the media/ and var/ dirs.

The proper way to achieve what you want is to also create a css file under media which would be editable via the admin. Then you can use images in media without any problem. This approach would make more sense, as I don't see how useful would allowing image uploads but not actually changing the css be.

Create a Sub-domain named "media.mytestsite.com". Copy the media folder to your sub-domain's root folder. Give the permission 777 to media folder. (Full permission). Go to you magento admin. Go to System -> Configuration -> Web -> Unsecure -> Base Media URL and put "http://media.mytestsite.com/media/". Go to System -> Configuration -> Web -> Secure -> Base Media URL and put "https://media.mytestsite.com/media/". Now save the configuration. Clear/Refresh magento cache.(It is very important) You have done it all... :) Enjoy..

These are instructions for having the front end put the sub domain for img src tags. As for uploading images in the admin panel... this is a different story.

If this is a dedicated web server, you can simply make your sub domain vhost and point it to your document root. This would be my suggestion.

If your subdomain is a different server or on a cheap cpanel server, then your going to have to script something or use rsync to transfer the images from the main site to the sub domain site every 5 minutes or so.

There are also modules available that might do this stuff automatically for you. You would need to look into cdn modules and see what's available an what fits your needs.