> My question is this, can I use it to reverse geocode the location?

Only if you intend to use the result in conjunction with a Google map

> What if I detect the location and on the website it will create a link
> to a google map?

You wouldn't need geocoding to accomplish that, and even if you did it
is clearly using geocoding results in conjunction with a map (assuming
you are not doing something else with results as well)

> (wouldn't that make me fall under the correct terms
> of use? meaning a user will never upload more than 2500 pics per day,

I don't know how many pics your user will upload, do you?

> so it will always stay under the limit AND it is used together with a
> google map?

I don't know how many pics your user will upload, do you?

> Now, if this was not allowed, how come google posts this code to do
> such actions?http://code.google.com/apis/maps/articles/phpsqlgeocode.html

Has nothing to do with geolocating users or uploading pics, has to do
with caching locations of addresses in a database for re-use when
displaying maps.

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