When Digg released its Diggbar a couple of weeks ago, I had a “Where’s the outrage?” post all ready to go. Now I’m cautiously optimistic it isn’t the end of the world (so I’m glad I never hit ‘publish’) – though I’m very much on edge.

Digg, as most people know, is a social bookmarking site and social hub that is an unbeatable traffic driver for news content sites. People share, rate and comment on news stories (among other links) and thus, visit your site when you’re “dugg”.

A couple of weeks ago, Digg launched the Diggbar, which makes it easy for Digg users to shorten and post links to Digg, as well as jump from story to story within the Digg umbrella. The big WTF moment, came when we all noticed that all of Digg’s links no longer went to the original content providers’ sites, but rather linked back to Digg. When you’d click the link on a story on the Digg site, it wouldn’t go to the story directly, but would open the page inside of an iframe at Digg’s site. Oh, crap.

At that time, TechCrunch noted that this would not affect most content providers’ web analytics and advertising displays, though it could impact the original source’s ranking in Comscore, Google and more. This had this news website editor weeping for the death of linkbait – and wondering when we’d begin to discourage our users from Digging our stories.

But maybe I was all worried for nothing. Last week, Digg set out to dispel the rumors of their alleged thievery, assuring we naysayers in the publishing world that their new gadget wouldn’t hurt us in SEO rankings, traffic and analytics. As Digg’s John Quinn put it, “Digg continues to have a symbiotic relationship with content publishers, and we anticipate these ongoing improvements will only enhance publisher traffic as more people discover and share content on Digg.”

Don’t get too relieved just yet. Mashable notes that when perusing Digg, users now have to click twice to see the real link (or three times if they read Digg in an RSS reader). This may lead to even more proliferation of Digg links over original links if readers opt to go the easy route and just use those shortened Digg links in their blogs and social media tools. Also, despite their claims, Digg URLs are showing up in Google and goofing up our SEO.

This has led some content providers to block the Diggbar. Engadget, for once, decided to block it last Friday, stating, “We believe that the work of content creators should be protected and treated as the unique product that it is, and that an end-user’s experience shouldn’t be tainted with a “catch-all” tool which diminishes context.”

Mashable weighed in over the weekend with the pros and cons of the Diggbar. The biggest pro, of course, is increased site traffic from eager Diggers…but it may not outweigh the cost of the impact on SEO. I suggest you take a read before you get fired up and ready to call your programmers.

In short, the jury is out. I expect to see more hubbub as the Diggbar becomes more and more popular. And Digg isn’t alone, Facebook is already redirecting traffic back to itself from your shared links. StumbleUpon is soon to follow. There may be a battle brewing between social media sites and news websites over these new tactics – so stay tuned.