Wordpress- removal of images from google index problem With Imaguard wordpress plugin

A Word Of Caution: WordPress Plugin “Imaguard” May Decrease Your Blog Search Traffic And Penalize SEO

Imaguard is a wordpress plugin that is supposed  to increase the image search traffic to your blog as it disables hotlinking of your images on the remote blog sites and in the google image search. It redirects the hits onto any such images towards your site and shows the image in the normal page layout.  Hence, increasing the search traffic of your blog.

Our team installed the plugin in the same faith. For the first couple of days the things worked fine. The blog search traffic increased by almost 30%. But then problems started appearing. While writing a post, when an image was copied into the wordpress editor window, it could not be seen in the editor window anymore. Also, the search traffic to our blog dropped 30% below of what it had been before the installation of this plugin as there was no image search coming to our blog.

We searched the web and found the answers to this, infact google penalizes the images on which a redirect has been implemented. Either, it removes the images out of its index or penalizes the search ranking of those images. We had no other choice but to disable this plugin but the damage is already done and the recovery is slow:)