This lady knew what she was doing - no one would create an entire website using all pictures of someone else and think that was ok. And it wasn't random pics from here and there, they were all mine - at least there were whole pages with just pics of my cakes. This is how she jump started her business and apparently it worked pretty well for her. Some people will do what ever is necessary to get ahead.
I know if I'm not going to watermark my pics, I'm going to have to be dealing with this. I did discover a reason to go ahead and use a watermark at the bottom of the pic because that will make it easier for anyone to identify who the photo belongs to if they do a photo search. Because other photos of the same pic will come up and some of those will have the watermark (like cakechooser and Pinterest).
AZ, I know my way around photoshop pretty well and have been digitally embedding watermarks in the data of my pics in order to track them.
On a side note, I've noticed something interesting about the types of names these photo nabbers use. So far about half of them have names having to do with something religious or that would make them sound more trustworthy. You know, like instead of Susies Cakes, it's Grandma's Angelic Delights (which is a completely fictitious name I just made up).