Explorer's previous handling of the alt attribute was against the W3C recommendations, and the other browsers had it right. The alt is for non-visual browsers, not for a tool tip. It took Microsoft a long time to come around on this point (and many others, too).
As to what the search engines will use, that is always a question worth watching and testing. Right now the alt attribute is what affects ranking, from what I can see, and the title attribute is not used as a signal. And that makes sense, because it is what non-visual browsers and screen readers like JAWS will be "reading" aloud.