Tom,
I assume you're talking about Fahrner Image Replacement technique. It has unfortunately two problems: it's not considered too accessible (see http://www.alistapart.com/articles/fir/) and if a user has css on but images off, she doesn't see anything.
There's a lot of different opinions about this, but Doug Bowman's piece (http://www.stopdesign.com/also/articles/replace_text/ , especially the important note in the bottom of the document) seems to be the most unbiased one I've read. It also lists a few techniques that try to solve the problems mentioned above. Dave Shea (http://www.digital-web.com/features/feature_2003-08.shtml) talks about i18n possibilities, too.
So my opinion: some image replacement technique is probably our best shot. BUT, we probably shouldn't use display:none or visibility: hidden for it, if and when we are replacing text with an image. I try to get some further information about the techniques developed to fix FIR's problems. For purposes like Tom's (no "real" text replaced) there's no problem even in the original FIR.
Jeff and Malte: If we are using a css-based method like the ones mentioned above, we can actually use even the png image in ie6+ (also in older ie's if we make a gif version of the pics too). The technique is described here: http://www.alistapart.com/articles/cssdrop2/
