There is ASCII art (which often doesn't turn out).

I think what you may be getting at, is an application that can create a small 2 colour image, and output as plaintext to be inserted into an email message or such. The viewer app would trap that data and draw it into a viewable/printable image.

Perhaps a link to a GIF or JPG file, if the server can stand the strain (graphics are bulky, hard to index, hard to "police", etc.)

It is also possible to write graphics for browser display in an open-source way, fairly light weight, using SVG. Possible, but not yet simple or commonplace. SVG may be the Esperanto of graphic languages.

This site would need to allow the XML -- it's not simple, but I would very much like to be able to add graphic content.

Well, you can set up a Geocities site on Yahoo for free. Check out My pathetic graphics content for an example. Also, most ISP's provide at least a little server space for customers to put up server content, so check with your provider.