I run a wallpapers website and some people hotlink the images, I don't want to stop the hotlinking all together but I think it would be nice to have a watermark on each image. I don't want watermarks to be displayed on the images if they're being viewed from my domain but if they're being hotlinked I want a watermark to display. I know you can add a watermark to an image with PHP but is it possible to do this dynamically with htaccess on hotlinked images?
yup, on a hotlinked image, passed it to a script first which place the watermark let say an image of abc.jpg is being hotlinked. your htaccess will redirect it to addmywatermark.php?image=abc.jpg on your addmywatermark.php add the code to place your watermark on images.
why not use in all your websites with watermark? i see a lot of graphic-cartoon-picture sites that had watermark in all of their pictures.