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Leeching
Leeching, also incorrectly known as "bandwidth theft", is the act of hotlinking an image from a server you don't directly control or have authorization to use. Jameth was apparently the first victim of the new secret LJ TOS provision which confuses leeching with a DMCA violation and can now be a suspendable offense.
On the other hand, if you are old school (not a n00b) then leeching is actually when you download something from a warez server and you don't upload anything back. Say you dial up a BBS and it says "No credits necessary, but please upload :):):)" or whatever, and you want to get, say, DBLANLFK.GIF so you fire up Kermit .. what the hell are you doing on my lawn get the fuck off my lawn god damn kids!1@!!!
Internet Etiquette and Leeching
Many people don't have an issue with leeching, as data transfer is now cheap and available in massive amounts through any good webhost. Most original complaints on LiveJournal concerning leeching were from those who made hundreds of blinking icons and then foolishly hosted them on free services such as Geocities or Angelfire, which rarely allow hotlinking anyway. When someone leeches these images, the accounts quickly exceed the allotted data transfer and the site becomes suspended or unavailable for a certain period of time.
Some websites, such as Something Awful, forbid leeching as well — mostly because you can't control the content that you're posting and many webmasters won't think twice about redirecting your request to goatse or some similar shock image. Others will go so far as to track where you're leeching an image and then change the file to something situation-specific in order to insult or embarrass you.
Image Leeching Pranks on LiveJournal
The most well-known case of an image bait-and-switch on LJ is probably 
moroveus' Operation Jour de Poisson, in which he changed his userinfo and journal content to appear as a Christian, and created a meme supporting the phrase "under God" in the United States Pledge of Allegiance. He included code to post which linked an image on his webspace as part of the meme and allowed it time to propagate. After some time, he changed the image to one opposed to the phrase, effectively confusing and angering many Christians and conservatives, as they suddenly found their journals advocating views opposite to theirs. Many other memes have the potential for something such as this, including the hundreds of image-based colorbars.
Another example of an image leeching prank is Jameth's Anti-user switch.
Icon Theft
Commonly known as hotlinking, this is one of the easiest ways to piss off some lesbian icon maker on LiveJournal. Nothing annoys them more, except for not crediting them for their creative masterpieces. Just find some random loser who uses Photobucket or Imageshack. Right click and copy the location, then post it as your own. This rapes the site's bandwidth, eventually causing some gay golden frog shit to come up saying ur bandwidth has been exceeded or some other useless crap. Now nobody can get off to their radioactively colored pixels. Wear some armor, by the way; this will cause a lot of drama, and nobody causes drama like an icon maker. Except for maybe fangirls.
It was predicted that in 2008 the internets would die in an inferno because of the collective wrath of hotlinked icon artists; it is now projected that it is on the way to destruction in 2012.
Leeching on P2P Sharing
In this context, leeching is when a lazy asshole, most likely one form of basement dweller or another, decides to download torrents or P2P files without ever seeding in return. Some programs, including Limewire, have a feature that prevents leechers from downloading at all unless they share a certain amount of files.