The image rights issue will definately take some working out, and there is apparently software that will stop image theft, but it requires a plugin so it may be of dubious value (who wants to install a plug-in to view a web page?). Also costs $500. More info on that here:
http://www.artistscope.com/copysafe_web.asp
For simplicities sake, I think the watermark might be the most reasonable option. There will always be some unscrupulus people, but I don't think we should let them ruin things for the rest of us.
I'd love to see an online museum and would gladly offer photos of my humble collection. I'd like to share an idea with you about an online "museum" of sorts in hopes of moving the conversation forward. I had this idea for a visual map interface a while ago and have spent some time sorting through the details, but I'll keep it brief here:
My idea was to have an online map of the Philippines where a user can hover over a region and see the local weapons there and follow links for more detailed information. Usage: you would hover your cursor over the map and you get a little pop-up window (or a sidebar display). In this pop-up you get a list of regional weapons. The user can select one of the weapons from the list and get a page that shows further examples (member provided) and has a little write-up on that style of weapon (bolo, kris, etc.). The write-up might be general or it could be region specific depending on the type. You could also include a link to search in the EEWRS forums.
I do have some experience doing this sort of thing and could offer some help (the idea was inspired by cubicle farm map I did for a former employer). I hope this gets those creative wheels churning and people offer their ideas as well.