Can I request references from people in the program I'm applying to? Sorry if this is an obvious question. I earned a MS in psych, went and worked a few years, and I'm thinking I want to go back and finish out the degree, earn a PhD. More than one of my professors at the time I was in school recommended I go on, but for personal reasons it wasn't the right time. I know they'd happily write a letter now, but is that appropriate given they're also program faculty? My current employers are willing to write letters as well (I work in MH) but I know there's usually at least one academic reference, and if I can't use the graduate school ones that's going to be a challenge.
I think that would be a great idea: your references are supposed to be advocating for your ability to perform the work of the program, right? Well, who would know better than people running the program? 

If one of the program faculty gets asked about you over coffee in the morning, and they say "Oh, AS2045? Yeah, he was in my undergrad classroom, and I think he'd be a great fit for our program, bring in a ton of good grants," then odds are, you're going to do well there.