When the rebels began fighting earlier this year, some elements of the the Libyan Air Force (LAF) defected. Those elements of the LAF that defected included several MiG-21s and MiG-23s that either defected or were captured at Misrata or Benina air bases. Other aircraft include 4 +/- Soko G-2 trainers, 1+ Mi-24 Hinds, and at least 3 Mi-2 Hoplite transport helicopter.
The photo above is of 2 MiG-21bis fighters and 1 MiG-21UM trainer somewhere over Benghazi. At the beginning of the NATO-enforced "no-fly zone", there was little to none of Gaddafi's air force fighting, and when the "no-fly zone" began, much of what the LAF was doing, stopped. However, as the photo above shows, NATO is cutting the rebels some slack.
During the "no-fly zones" over southern and northern Iraq in the 1990s, coalition pilots shot down straying Iraqi aircraft quickly if they did not run away. In this instance though, NATO seems to be letting the rebels get away with flying and providing close air support while they sit back and enjoy the show.
One of the possible reasons NATO is letting the rebels use their air force is that NATO does not have enough ordnance. If this the reason why the rebels are flying then it shows an enormous gap in the capabilities of NATO members, and a serious problem for those countries