Hotlinking, Pros, Cons, Now I'm Confused

Hotlinks?  No, it's not that, not at all.

Actually, I only heard of the term today when Shy Guy, who comments on Shiloh Musings, told me I shouldn't do it.

hotlink
1 (n): A hyperlink to a media file (video, audio, Flash, image, etc.) on another site that bypasses any html pages that would identify the site or earn it advertising revenue. Prohibited on many message boards and blogs, as it saps bandwidth from the site serving the media and earns the ire of the site's owners.

2 (v): To post a hotlink.
Hotlinking is not only bad netiquette, it's theft.

An active hyperlink to a media file on another site that is active in the page it is used in without using the home sites HTML code.

Hot linking is prohibited on many message boards and blogs as it saps bandwidth from the home site serving the media file(s). It's illegality has yet to be tested.

In some instances hot linking is encouraged due to it's ability to draw eyes to the home site.

I've been doing it for awhile, considering it preferable to copying someone's picture/illustration and posting it as though it's mine.

Now, I don't know what to do.


Input requested, please!!