Satellite Imagery : How reliable is it for rainfall / adverse weather prediction?

Satellite Imagery (both Vis and IR) is an invaluable tool for the lay person to obtain information on the formation,development and movement of weather systems. It has been a part of the STH blog for the past 3 yrs and is an integral part of the "STH Stormwatch" series in which we monitor weather systems that form in the Bay of Bengal.
This information, earlier only available to scientists and meteorologists is now available to anyone with internet connectivity. Having said this however, it  is not advisable to depend on satellite images exclusively as a method to predict rainfall / adverse weather, the next few images will explain why :

Thus it is clear that satellite images though vital for early warning CANNOT give foolproof warnings. For those interested the link to the Darjeeling "Hurricane" is here.

Rohan Rao,
Kalimpong,
Dist - Darjeeling,
E-mail - rohan.rao1313@gmail.com