Digg can do what ever they want with their site, however by putting other sites' pages in frames, they are close to stealing content.

What makes it worse is that people who read Digg, see a good article, then copy the address from the browser address bar. Since Digg is now using frames, the URL will be on Digg and Digg will collect the links and link juice.

And since Digg is a respected "authority", they may get credit for the article.

IMO, this is stealing links from the real content providers. Let's not forget that Digg doesn't create content of its own, only points folks to content...Now their method of "pointing" to the actual content raises ethical and possibly legal concerns.