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I am afraid that to debug a problem like this you need to understand the code that Publisher produces. If I was in your position I would first hand code a simple web page with just a picture and test to determine if the problem was with the reader or with the code generation. Actually you should be able to pick up sufficient html to do that amount of hand coding in a couple of hours.
alt will be read. Most blind users turn off images, since there is really no sense in having images load when you cannot see them. The attribute that will be read, whether the image is loaded or not, is the
title attribute. Advice to developers: use both
alt and title, but make sure you first understand how each are supposed to work. Advice to blind users: turn off images, as it almost guarantees a better experience.