I've added an image asciifier tool to the Chaucery fun area of this site. It converts given images into text only representations, and can work on uploaded files, direct URLs to images, or even convert the images on a web page in situ.The coloured asciified images are created using HTML colour codes, but the black and white ones are more oldskool, using different characters to represent different intensities.
Traps for the unwary
The main caveat to watch out for is that large images can result in very large html pages. The asciifier tries to minimise these problems by automatically limiting sizes, but there is an option for the adventurous to override these limits. As the asciifier works its way through the images in a page, it will progressively reduce their resolution if the page size limit will otherwise be exceeded.
There is also a limit on the number of images within a single page that will be converted, with the remaining images left blank. If there is a particular image that you wish to convert that the asciifier does not reach then input the URL to that image directly.
Images containing colons (excluding any initial http://) are not converted - it's a feature, not a bug.
The size and width specified in the img tag are currently ignored, so when these don't match the actual image dimensions the latter wins out.
Conclusion
Whilst I can't actually think of any reason to want to convert images into HTML, I think it is interesting that pixel perfect copies can be created in human readable and editable form, which is really what the World Wide Web is all about.