Seems to me that that can, in principle, produce both false negatives (images turned off in client) and false positives (if a client were to parse HTML-format message and retrieve embedded graphics autonomously before the user actually displayed the message for reading).
Even ignoring the fact that "my client has displayed the message, including any embedded images" is not equivalent to "I have read the message" (which is especially a factor in clients with a preview pane, where simply being the most recent message when the client is opened may result in the former condition, but quite often not the latter if the user is opening the client to send a message or look for a particular message.)
Even ignoring the fact that "my client has displayed the message, including any embedded images" is not equivalent to "I have read the message" (which is especially a factor in clients with a preview pane, where simply being the most recent message when the client is opened may result in the former condition, but quite often not the latter if the user is opening the client to send a message or look for a particular message.)