Here's an update from Kobo on the issue of the missing illustrations:
"We apologize for the frustration you must be feeling. To answer your questions: there isn't a problem with the Kobo Desktop software, it just isn't configured to transfer the images at this time (we are releasing an update within the next month to correct this issue)."
So complaining to Kobo was worthwhile after all. Hopefully the fix will appear shortly.
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