You can most probably ignore this and use the image any way you like, if it is in the public domain. They don’t actually have the right to determine how the image gets used after it gets out—after all, there is no copyright on the image.
They do have the right to control your access to the resource, i.e. only provide low-res images.
It is really disheartening to see institutions do this kind of stuff, but it is quite common (a positive exception being the Library of Congress, who make it quite clear that they hold no copyright over the collection). Carl Malamud has been on this before: he harvested images from Smithsonian seemingly put under draconian licensing, and uploaded them to Flickr.
They do have the right to control your access to the resource, i.e. only provide low-res images.
It is really disheartening to see institutions do this kind of stuff, but it is quite common (a positive exception being the Library of Congress, who make it quite clear that they hold no copyright over the collection). Carl Malamud has been on this before: he harvested images from Smithsonian seemingly put under draconian licensing, and uploaded them to Flickr.
http://boingboing.net/2012/11/19/absurd-licensing-terms-impo...