When a file is uploaded with your form, it becomes a file on your server, immediately. The web server puts it in a temporary directory and PHP tells you where it was put through the $_FILES array. You can immediately access this file, you can move it somewhere within your website's documents, and you can immediately print out an <img> tag pointing to where the file was put.
Stop writing "an img tag won't work" as that is exactly how you display the image.
Read the PHP manual page "Handling file uploads":
http://php.net/manual/en/features.file-upload.php
The PHP manual should always be the first place you go when you're trying to do something you haven't done before.
imgtag should refer to a php variable pointing to the location of the file! i think u misunderstand php and its usage in dynamic sites altogether.