No, it's not deleted by default, especially if you are using APIs to do it (no warning etc.). You would have to find the contents using it and remove the link yourself.

Ok. What's the reasoning behind keeping the broken link?

There's (to my knowledge) no APIs to find commerce entities which references an image, so I guess I have to query the database directly and then load those content items and remove the asset from CommerceMediaCollection and save. Would be nice if that was included in Episerver. I know that this has been an issue for quite some time. Could this be added as a feature request perhaps?

I have good news for you - Media is just IContent, and you can use ContentProvider.GetReferencesToContentItems to find which catalog contents are using a specific media. 

You learn something every day, thanks!

It does not do that automatically, no.

But you could do it yourself as part of the image deletion process by doing something like this:

var referencesToImage = ContentRepository.GetReferencesToContent(imageToRemove.ContentLink, true);
var contentLinks = referencesToImage.Select(x => x.OwnerID);
foreach (var link in contentLinks)
{
	var associatedProduct = ContentRepository.Get<ProductContent>(link);
	var assetToRemove = associatedProduct.CommerceMediaCollection.FirstOrDefault(x => x.AssetLink == imageToRemove.ContentLink);

	if (assetToRemove == null)
		continue; 

	var clone = product.CreateWritableClone<ProductContent>();
	clone.CommerceMediaCollection.Remove(assetToRemove);
	ContentRepository.Save(clone);
}

I haven't tested that code properly so some more error handling may be needed, for example if it's not "ProductContent" that you have your image attached to, but you get the general idea at least. :)

Anyway, after deleting the assets based on the references you can safely Delete() the the "imageToRemove".

If you for some reason already have a ton of products that have this faulty state you could ensure that all CommerceMedia points to something as a part of your saving process, but this approach would be more difficult to manage.

var unlinkedAssets = product.CommerceMediaCollection.Where(x => ContentReference.IsNullOrEmpty(x.AssetLink));
var clone = product.CreateWritableClone<ProductContent>();
foreach (var asset in unlinkedAssets)
{
	clone.CommerceMediaCollection.Remove(asset);
}
ContentRepository.Save(clone);

Edit:

Huh... weird. I didn't see any answers in this thread when I wrote this. But it seems like this has been answered hours before I even stumbled upon the thread.

It was a bug on world, it has been reported and fixed now.

Thanks Erik, we've just deployed new version with latest CMS so it might cause several problems. Sorry for any inconvenience that might occur.

Ok, that explains it.