I guess you never read the full story, you can clearly see a link to evidence of Expedia doing the same thing in France and getting sued for it: http://www.tnooz.com/2010/04/19/news/tripadvisor-and-expedia.... Just think about it, if a huge company with hundreds of lawyers still got sued for these tricks - I bet they have done lot's of similar things and got away with it.

Also a part regarding images not hosted on Expedia. Do you really think such a big company as Expedia will allow to host images on hotel's own servers? It's impossible to handle Expedias traffic with a small shared hosting which most of the small hotels are using...