Images are not displayed in Internet Explorer, versions 6, 7, 8 and 9

Setup:
Checkout, build and running the server is done on MacOS.
Issue is reproduced in IE running in Windows XP on VMWare Fusion.
Version info:
VMWare Fusion: Version 3.1.3
Guest OS: Windows XP SP3
Internet Explorer: Version 7

• Checkout archetype version 1.03.05:

$ mvn archetype:generate \
-DarchetypeRepository=http://maven.onehippo.com/maven2 \
-DarchetypeGroupId=org.onehippo.cms7 \
-DarchetypeArtifactId=hippo-archetype-website \
-DarchetypeVersion=1.03.05

groupId: nl.myorg.proj
artifactId: ie-image
version: 1.01.00-SNAPSHOT
package: nl.myorg.proj
projectName: IE Image check

• Build the archetype:

$ mvn clean install

• Start the server:

mvn -Pcargo.run -DskipTests -Drepo.path=/Users/paul/Documents/data/proj-20110922-ieissue

• Reproduction path:
• Login to the CMS on the Windows platform, using Internet Explorer 7.
• Open the document /ieimage/News/2011/Toyota suggests putting a glass of water on your dash
• The image in this news document (ieimage/News/2011/toyota-a-glass-of-water-image.jpg, from the images root) is not displayed correctly. Only a single horizontal line of pixels (probably the middle line of the image) is displayed.

Further info. This reproduction path concerns Internet Explorer 7. The issue also occurs on Internet Explorer 6, 8 and 9.