You've gotten some great advice from people. Back in 1995 and 96, there were tons of sites with "borrowed" content, often scraped off of newsgroup postings, and many of them managed to survive for a while. But not any more. If a content owner has registered its images with the copyright office, I believe the statutory penalty for use of a single image (whether or not you charge for access) is somewhere around $10,000 PER IMAGE. So if someone wants to be a dick, they could bankrupt you overnight. Although most content owners will just send you a cease-and-desist order, you can't count on that, and if they decide to go after, there's not much you can do. The "It was on the 'net, so I thought it was public domain" argument won't stand up for a second.

And the 2257 issues can't be ignored either. Some say that the Bush justice department, if/when it starts taking action against online adult content, will start with TGP and free sites since arguably those are the most accessible by minors. TGPs, at least, can argue they aren't actually hosting the content. But if the images are on your server, you're dead meat if the Feds come knocking.

The good news is you have a ton of traffic and a large number of loyal viewers. You can slowly (or abruptly, but I'd vote for slow if your intestinal fortitude is adequate) remove your unlicensed content and replace with sponsor galleries, and you can start placing attractive banners for sponsor sites, and convert your cash drain into a revenue generator.

The other thing that no one has mentioned so far is bandwidth. In today's marketplace, 150 gigs of bandwidth is not a lot and shouldn't be very costly to you if you shop around. You have to be a little careful because there are too-good-to-be-true deals like 500 gigs for $25/month, but there are a number of decent providers with reliable, redundant bandwidth that can help you out. (We do all of our own server admin, which saves us a lot of $ -- support is the most expensive part of hosting -- and we pay about $100/month for dedicated, unmanaged servers with 1200 gigs of bandwidth.) Also, at that level of use, depending on how your site is put together, you'll probably want a dedicated server as opposed to a shared one... but that's something you can work out.

Hope that helps!!