Thanks for the response.
The image appears properly if the report is exported to disk. When a user opens the HTML file locally, the image is loaded from the local disk because the path is found. The problem occurs when the HTML output is embedded within the body of an email and sent to a recipient. The remote user cannot resolve a local file path - it requires an HTTP URL.
We cannot use PDF because that is a binary format and cannot be embedded within the body of an email.