Initial conditions: make sure that View/Images/Show Images radio button checked
The image placeholder should expand to meet the required space needed for rendering the alternate text and to render it as inline. The requested dimensions for the images should apply to the image, not to its textual replacement. The alt attribute should work for the user, not against the user in such case.
Alternate text for images: why image dimensions should NOT be preserved when an image is not shown 11 convincing arguments presented by Ian "Hixie" Hickson.
The reader of the page
frankly couldn't care less if the author has made a mistake and the page is
not completely available. The reader wants the information. So if an image
is not available, the page should adapt. This is what alt text is designed
to do. Ian "Hixie" Hickson