[Tonus]

It seems to me that a morph would meet the definition of a derivative work: http://en.wikipedia.org/wiki/Derivative_work  As such, it seems there would be reasonable grounds for a fair use defense, since a morph is substantially different than the original, and it is a form of artistic expression.  That said, from a practical standpoint I would have to agree with 10-4's advice: stick to freely and publicly available sample photos, and retain any identifying information that would help locate the original image.

Here is a short blog post on Fair Use as it applies to written material.

Here is a slightly more expanded description of Fair Use and copyright.  It is posted on the EFF's page and is probably more thorough and accurate (the Electronic Frontiers Foundation is a group that studies the legal issues involved in copyright in the digital age).  Their explanation in regards to use of images is a bit ambiguous for our uses:

When can I borrow someone's images for my blog post?

Images are subject to the same copyright and fair use laws as written materials, so here too you'll want to think about the fair use factors that might apply. Is the image used in a transformative way? Are you taking only what's necessary to convey your point? A thumbnail (reduced-size) image, or a portion of a larger image is more likely to be fair use than taking an entire full-size image. If you want to go beyond fair use, look for Creative Commons licensed images.

(And as an example, the above quote falls under the Fair Use Doctrine.)

The US Gov't has this page that answers questions about copyright law.  As someone else already pointed out, copyright laws vary from one country to the next.

Here is a blog post listing some common misconceptions (he refers to them as "myths") about copyright law.  I assume this applies to US copyright laws.  It does cover some ideas already talked about in this topic (such as the 'beneficial advertising' angle).

As wary as I am about trusting Wikipedia, they have an extensive entry on Fair Use in the USA.  It's very long but looks like a well-researched and comprehensive article.  Still, it's Wikipedia, keep that in mind.

***

My view on it– morphing images is unlikely to be covered under Fair Use.  I am assuming that the copyrights to photographs of fitness models and FBBs belong to the photographers who take the photos, unless they sign an agreement passing those rights to someone else (a magazine, for example).  I tend to doubt that they do that, but I speak from ignorance and cannot say for certain if it's true.

An important thing to remember is that Fair Use does not protect you from being sued!  You may be covered under Fair Use guidelines and thus have a good chance to win a case, but you will probably have to contact a lawyer at the very least.  However!  I find it unlikely that a plaintiff will do anything more than send a cease-and-desist letter, as court filings are pretty expensive, and most of the time a letter gets the job done.  But again, take that as the opinion of someone who has almost no idea of how this works in real life.

If you are hoping to be able to do lots of morphs and display them on the internet, then your best/safest bet is to speak with the people who do the picture-taking.  If it is for non-profit use, they may be more willing to allow it without any strings attached.  For all you know, you may find a photographer who thinks it's an awesome idea.  You won't know unless you ask.  I believe that there are at least one or two people here who photograph muscular women or work with photographers who do so.  They may be much more sympathetic to what you want to do and be more cooperative.

[Holiday]

The points of distribution and use seem vague. The few photo manipulations I've done were never for profit nor promotion. So I don't understand how I could be charged for that.

However, the one reason I'm going back to illustration is because I'm tired of trying to cut and paste images to look right. I don't even like the backgrounds in many FBB morphs.

[Author]

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