Smart thinking elf...that was my original idea as well (pretty much exactly as you described it). But try it. Then save the site in IE (not browsing source code) By going to File - Save As. What happens to the image? The gif the php script points to gets downloaded. So...I had to use JavaScript.
As for the application to the site process, I am still unsure how to implement it. Orignally I wanted complete control over the code, so they would include a .js from my server, but I realize now that's not so smart. So, I think they will have the Java Script, but as for the PHP, it will hardly use any resources, cause, what are the chances the system actually does catch someone and has to email the site owner. But still, I don't want to make it a "lifetime" service, so I may force them to put the php script on their host, or charge a small amount yearly.
And to get people to not cut the code when they come across, I don't know. I thought about putting comments around it like "Search Engine Ranking Improvement code. Just copy and paste from
http://address.com and place on your site to automatically boost your websites ranking" Then actually setting up the fake
http://address.com site.
But oh well, maybe this idea is hardly worth it. I haven't spent any money on it yet, just a couple hours of time (5 mins making the service, hours trying to make a design that looked somewhat useable).