I've got a couple VT340's in storage, they have ReGIS graphics on them which is quite fun. It would be great if someone decided to implement ReGIS in one of the Linux or Mac terminal emulators because all those cool DEC BASIC games would suddenly work great.
The only limitation I've found is that the standard ppmtosixel conversion tool spits out 8-bit control-characters, but xterm seems to only recognise their 7-bit equivalents (hence the sed command in that screenshot).
It won't let me edit the comment, but I should throw in: xterm must be compiled with `--enable-regis-graphics` (or `--enable-sixel-graphics` for sixel graphics) for it to work. Your distro's xterm might not have been compiled with those flags.
This was the case for me, but rebuilt from source and it worked fine. Given the code exists I wonder why it isn't more common in terminal emulators. Its really handy when you want to pop up a simple picture or a line drawing.
Surprised that you missed it, so I'm still not quite sure if maybe I misunderstood something in your question, or you were just having some healthy holidays around that particular time :)
[EDIT] Oh! For more added fun, I've stumbled upon ReGIS's sibling for bitmaps, SIXEL; some pretty screenshots e.g. at:
[1] http://terminals.classiccmp.org/wiki/index.php/DEC_VT340