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Yes that would in fact be hotlinking.
Why *can* you do it? Because it's hard for CNN, for example, to determine whether you fetched that image because you were looking at a page on CNN, or because you were looking at a page on the Cellar. Your browser requests the image in nearly the same way.
There are techniques for limiting access, but they are tricky, and depend on the participation of the browser.
Hotlinking of Cellar images has been a big headache for me. Often I see traffic jump, only to find some remote blog in Russian has hotlinked the iotd.
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