In 2009 Wikipedia ran into a similar problem with the National Portrait Gallery:
http://www.examiner.com/museum-in-san-francisco/internet-101..., here's what Wikipedia has to say about the C&D letter:
http://en.wikipedia.org/wiki/National_Portrait_Gallery_copyr.... Someone figured out how the gallery's image servers worked and downloaded originals (normally you were allowed to see only low-res copies). As of today, they are still on Wikipedia (
http://commons.wikimedia.org/wiki/Category:National_Portrait...)
My recommendations are:
* Build a nice website, but don't put too much time into it (~a weekend perhaps) and put the images online
* Make sure you give proper reference as to original source of the images
* Try to contact someone from Hockliffe Collection (but don't try too hard), as rmah says this is the polite thing to do. Document your effort on a blog for all to see.
* Don't feel squeamish about asking for donations to cover server expenses, etc. In fact, I would definitely go this route rather than putting ads on the page.
* If someone sends a C&D, contact Wikipedia guys and see if they can help. Generally the threat of negative publicity is enough for the institutions to back down.
They may still be able to shut you off, after all you don't have the clout of Wikipedia. But still, I think the utility you'll provide to the general public far outweighs any risk.