Online class projects on commercial site - fair use or not?

For an online class, students have the option of doing a project. If desired, projects will be posted on the instructor's web site. This web site is a commercial site, as it exists as the home of the instructor's business of offering online classes. The posted project(s) would be for viewing only.

If a project includes a collection of images, collected from numerous sources (web sites, books, etc.) with student-written captions, would the use of those images for purposes of the project, be considered fair use, as in academic or educational fair use? Would posting the project, with the images, on the instructor's web site constitute infringement?

The instructor opined that if one links to the images in their original location, then it is NOT infringement, but if the images are actually copied onto her server, it IS. I disagree; I think linking to images on other sites is actually worse, as you are using their bandwidth for free as well as their image. The instructor does not think image use for these projects would qualify as fair use for educational purposes. I do.

Finally, if a student were to publish (via LuLu or Blurb, say), a private, limited-edition book of the project, including the images, would this be infringement?

Very Curious Purrrrrs...
wac

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