EFF's response: “Our client has no obligation to, and thus will not, comply with Zillow’s demands. Zillow’s legal threats are not supported and plainly seek to interfere with protected speech.”

The only way this kind of bullshit will stop is if legal demand letters (like Zillow's) that are used with little to no legal standing - purely to bully - need to come with quick and easy recourse where the instigator and their lawyers get nice big fines.

That's a soft way to excuse the charge of computer fraud.

Is it the rehosting of images that constitutes the 'fraud' description? Or is there another element to the story?

I think they were trying to argue that she was exceeding her authorized access as defined by the ToS and therefore "committing fraud" under the CFAA.

Ah, I gotcha.