Veoh wants to have it both ways: legit distribution deals with the likes of CBS (NYSE: CBS) and guerrilla tactics to showcase NBC and Fox content from Hulu. Prison Break, Heroes and other other prime-time shows, as well as episodes from Hulu’s catalog are on Veoh now without any agreement. Beyond the embedded versions, which use the Hulu player, Veoh also is making full download episodes available through its own player VeohTV although the source of the two episodes I tried didn’t appear to be Hulu. (A Veoh spokesman says none of the VeohTV downloads come from Hulu.)

The News Corp.-NBCU JV is still in private beta as a destination site—although that could lift as early as this week—but shows also are being distributed through a partner network that includes AOL (NYSE: TWX), MySpace, Comcast, MSN and Yahoo (NSDQ: YHOO) via a Hulu video players skinned for the various sites; hulu.com beta users can post embedded video ranging from clips to full TV episodes or movies on their own sites. Hulu’s standard statement when the Veoh use became public late last week: “We encourage the viral distribution of Hulu content in accordance with our terms of use.” When I asked if Veoh was within the terms of use, a Hulu spokesperson replied: “No, this doesn’t fit within Hulu’s terms of use.” When I asked which terms were involved or if any action was being taken, she said she couldn’t go into greater detail.

A Veoh spokesman said Hulu has not contacted the site about taking down the videos: “To my knowledge, we have not received any such notice from Hulu. In fact, we continue to hold active and productive discussions with all of the major networks and sites (including Hulu) about more formal distribution opportunities.” But someone familiar with the situation said Fox has told Veoh to take its programs off the site; they’re still up.

The terms of use for hulu.com include at least two possible issues: the embeds are supposed to be for personal, non-commercial use and the content is supposed to remain in Hulu’s player. So far, Hulu appears to have been pretty laid back about going after offenders. Openhulu.com, which duplicates the catalog and makes it available outside of hulu.com’s private beta, has a note up saying it’s received a cease-and-desist letter but the content is still there. Openhulu.com does have its own ads but it only provides the video within the Hulu player.

Veoh, whose backers include Michael Eisner and Tom Freston, already has been sued for copyright violations. Universal Music Group sued last September after Veoh tried to head it off by filing a pre-emptive suit.

Update: Veoh followed up today with more on VeohTV: “We are only making their embeddable content available for viewing on our site or in our VeohTV beta, and we are retaining all of the ads within their videos.” (As Chris Albrecht points out in the comments, the ads did not work in the video for a few hours the first day but they’ve been in all the embeds I’ve tested since then.) The rationale actually depends on carrying the ads: We’re providing a more comprehensive experience to our viewers and driving a large and valuable audience to Hulu’s content and advertising partners.”

Turns out that Fox’s requests that Veoh stop carrying its content started before Hulu. The network is irked by the current situation but is being careful to let Hulu handle its end.

• NBCU-NWS JV Hulu Launches With Private Beta Portal, Open Distribution; Sony, MGM Deals
• UMG Carries Out Threat To Sue Veoh For Copyright Violations