I've seen quite a few instances of image theft already. A friend had pretty much her whole website ripped off (complete with hot links to her pics so the thief wasn't even paying for bandwidth). Sometimes it's malicious, sometimes it's ignorance (people genuinely don't know they shouldn't do it) and sometimes it's accidental (people believe stuff is public domain and it's not).
But this one beats them all.
Check this out - http://lightingtutorials.blogspot.com/2009/12/robert-miller-photography.html
It's a blog that looks like it has stolen ALL its content so it can run a link bait style AdWords campaign. That link is the blogger's public response to somebody who politely requested that he stop stealing his stuff.
Blogger rules say only the owner of copyright can complain so all the rest of us can do is look on in shock. But best of luck to him holding onto the AdWords revenue when they close it down.