I agree with HarryT, I think it's (at least) a problem with the html rendering.
I tested it with a document that called for a picture that was in the same folder as the html file and it did not work. If the html doesn't display a picture that's in the same folder, I don't see how it could display one that's in a different folder, so I'm pretty sure picture viewing will not work on PG's books.
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