Thanks for posting this. I just noticed it but as a web developer who uses various APIs (mostly from Google) I can tell you that these people know that what they are doing is illegal. There are still many sites that use RSS to pull Flickr images and use them. The coin related site in this link STILL has Flickr image feeds without indication of copyright or original ownership. I, for one, and probably leaving Flickr over this.
Yahoo! is not ignorant of what is going on. Yahoo owns a variety of overseas companies that do malicious things from click fraud for pay per click web advertising to engaging in domain parking. And there are some Chinese democracy activists in jail in China that aren't happy with Yahoo either.