Why do we need art?
It's fun. And they could be worth different amounts of money to different people. An ex-soldier would like a certain painting better than a travelling bard. Plus it would be fun for the painter.
How would we stop copy-paste?
Insert code to not allow it. And right-clicking and viewing the source for that matter. While we're at it, can you disable print screen?
How do you make artwork in-game?
A simple painting program could be brought up and saved to the server. There would probably have to be a limit on number of pictures per day. Or you would need special tools, like brushes or an easel.
How do you make colors?
Using a mortar and pestle to grind up resources. Like carrots for orange, roses and clay for red, coal for black, etc. Then you could use a certain amount of paint (or dye), depending on how large the painting is. And this could also apply to dying fabric for clothes! Also, add more flowers for more colors.
What if things start to erode one day?
Then you could build frames. They'd need wood, glass, a few grams for the hook and nail, and a hammer or mallet maybe.
What about pictures already made?
Turn them black and white until someone redraws them with some color. That would mean you could set it to be editable, but not copyable.
That's about all we've got.
I really don't like the disabling part print screen and cut and past happen to be something I do a lot cause I s*ck at typing that and I'm not very creative like that but I do like to admire things and some times I like to save it to my computer. Have you ever saved a picture from a website and put it as your background? 
