Actually the site has no legal worries regarding copyright. The use of the images falls squarely under one of the fair use exemptions, that of Critique. The website is aimed at demonstrating how not to take photographs if you are a professional photographer, and are accepting money for your work. Although the site is harsh it is still legal in what it is doing. As to the matter of obscuring the photographers watermark, that would depend on where the website (as opposed to the shared images on FB) is based. If it is outside of the USA then the DMCA rules (which are I think where the rules on removal of copyright information are enacted in the USA) do not apply. Also I seem to recall that even the US legislation on removal of watermarks requires that there also be an element of claiming the image copyright as belonging to the infringer. In the situation of that particular website, the placing of a mask over the photographers identifying marks, outside of any other claims to ownership, which they clearly do not do, probably falls outside of those regulations. So it would seem the site is clear as far as copyright usage, and probably in the removing of identifying marks.
The above makes no comment on matters of taste or morality of the owners of the website. I have to say that the images that feature are really really bad considering that they are all produced by supposedly "professional" photographers for clients, and were paid for the images. As far as I am aware they do not feature the work of amateurs, I would not agree with such harsh behavior towards those who are not trying to earn a living with these images. The thing is that seeing this level of work showing up regularly of the site I am no longer surprised by the number of folks who also end up stealing other photographers work for their (usually) facebook based pro-photography page. The Photo Stealers blog seems to out around two photographers that are using others work as their own to build a portfolio of work.