Unfortunately, RTF doesn't handle graphics in the Sony implementation. Cybook and the Kindle don't handle it at all. That's why the EPUB recommendation. The Hanlin readers (BEBook, Astak, and others) do handle rtf with pictures and the OpenInkPot open-source software also does (but it only runs under Hanlin machines currently.)
I like RTF. It's the easiest format to fix typo's with. But the hardware world is focused on tightly proprietary formats, nowadays....