I'm doing the happy jig at the moment, my competitor just had the snot beaten out of his/her image rankings. For years they would have a set of top images in search for every query but the images were hotlinked from their sources (primarily classifieds sites, galleries etc) and not really hosted by the competitor.
While doing a routine check of my image rankings for particular keywords I noticed that the top 4-5 images for one search had remained the same but the source had changed. These used to be my competitors rankings, but not anymore, now the source was ranked.
After performing a site:example.com in Google images, with example being my competitor, they still return 50,000 images but ALL of the source accreditations are of the source and clicking on the image leads to the SOURCE site, not his/hers.
It's weird to see a site example.com/site-a search yield results that when clicked lead to example.com/site-b but it's happening, Google's getting it right and denying my competitor traffic on borrowed images.
/continues doing the happy jig! (fewer bogus backlinks from image visitors to fight against!)