Considering that there are certain sites that FreeRepublic doesn't want articles or images posted from, and considering that there are certain rules about excerpting articles from certain sites (Washington Post for one), let me suggest that FR put a list of these rules at the top of the page where we compose our posting comments.
I'm sure that would at least prevent a lot of confusion and at most prevent another lawsuit.
Sound like a good idea?
If you post a thread, there is a comparison against a list of "Do not post" sources. It is even possible to get something removed from that (Aintitcoolnews was blocked for awhile even though some were attempting to cite it only in Chat/General Interest).
The Rotten.com images aren't being posted as their own thread, so no comparison is made. They are being posted as replies within a thread. Since it is very rare that someone would cite a full article (especially from LAtimes/WPost) in the body of a thread as a response, it is not a common problem.
The name rotten.com would appear to make it clear that there will be few "general audience" pictures to be found there anyway. The bigger problem comes when even a plausible image is replaced (manually by the operator of rotten) with something deliberately offensive.
It sounds like Rotten.com's administrator looks through the logs at times to see how his bandwidth is being used. I know that Jim Robinson told me not to use any more pictures from a site (which was itself illegally using copyrighted images of tv characters) because they told him to cease and desist. I did not argue (and it is a small enough site that it doesn't need to be mentioned now).
Another example (not even a "bandwidth" thing) was when an overseas administrator who had a dream fantasy about killing the president saw some hits coming from FR. It was brought up because it matched the death-threat t-shirt slogan being offered online by an American company. I think in the end, the whole thread was deleted so that angry young man would go away (he signed up at least 3 times to promote his site after he learned of FR).
So, moral of the story is that some webpage authors do look up details to see what traffic comes to their site and where it comes from/goes. And what's more, some of them rabidly hate conservatives, capitalists, Christians, and/or Americans.