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The alt attribute on an img tag is meant to be displayed when the image cannot be displayed. The transcoding action purely drops the img tag when the image format is not supported. It should replace the tag by some <span>foo</span> where foo is the value of the alt attribute of the removed img tag.
The alt value is correctly used when the requesting device supports no image format at all, but not in the less restrictive case where one particular image type is not supported. see added TODO in the latest version of the file in CVS.