Copyright. It is a difficult subject. In terms of altering images to remove watermarks, this is permitted. Heck you can do whatever you want with the image and copyright can't touch you. Copyright steps in when you distribute the image and share it with others, and depending on the media you edited or are re-distributing, the copyright laws dictate what you can and cannot do with the image. Copyright also applies when you use said image in say, a game or a movie. Because that image belongs to someone else (intellectual property rights), you can't distribute your media while it contains that image. Apart from that, I don't think you'll have the cops bashing your door down because you edited an image. Just don't distribute it. Or distribute only 10% of it, where fair use applies.