I'm rather curious, so say another website is hot linking an image of mine, what kind of effects would this have within search engines?

I don't think it holds much weight, if any, anymore.

But this question made me wan't to do a go**gle image search and see if any sites that were hotlinking to others were credited for the hotlinked image in g**gle's image search. I have not noticed any that have been and if thats the case perhaps this hotlinking could put some weight on the hotlink victim in g**gle's image search? Probably just the rum talking.

I do believe that they effect your page in some aspects. Alt and Title tags are great for placing keywords. Just remember that they alt and title tags are also used for accessability and are read by people! They are easily abused...

i would put the full mydomain.com address in those alt and title attributes if that was the case. for non text browsers.