Does This Constitute Stealing or Copyright Violation?

Say I take a picture from the Internet, unwarranted, without permission of whoever owns rights to the picture/photo/image/whatever.

I’m assuming most of you here know basic Flash, so…

Let’s say I took that picture, imported it into a blank .fla, and dragged it on the stage. I lock this layer. Then, I make a layer on top of the layer that the picture/photo/image/whatever is on. Using the drawing tools, I trace lines in the picture/photo/image/whatever, and color in at my own liking.

I add different elements and get insanely creative, but essentially, I outlined another picture somewhat. The final product of my work maybe similar or outrageously different from the original picture/photo/image/whatever.

Would that be considered an illegal offense to the person who own’s rights to the picture/photo/image/whatever?

…and no, this is not just some hypothetical trivia for the sake of fun argument, I’m actually wondering. Because, I wonder, for example, how this guy made a motorcycle completely in Flash…I could do something quite similar if I…

a) drew a sketch on paper, scanned it into my pc, then used that outline to do something in Flash
b) got an image from the Internet (as I have described above) and made an outline, then gone from there

Anyone?