FAQ for Monotone Theme says:
"Why aren’t my images working?
In order for Monotone to work with your images, they need to be uploaded to your blog and then inserted into the posts from your Media Library. If you are attempting to insert images into your posts and the images are stored on another web site, it will not work."
However I am using linked images in one of my blogs http://realitymontage.wordpress.com and they do seem to work. Perhaps the FAQ needs to be updated. Or am I going to get in trouble later on by doing this?