Why are MailMime images not embedded when sending an eMail via Rules?
Double check your setting on the mime mail configuration page.

In recent versions of the mime mail module there has been options added in relation to embedded images.

The option is called "Link images only". Generally I would turn that on as I don't see the need for embedding images in emails. You will generally have less issues with remote images.

There is also a permission for the mime mail module that relates to attached images, so check out the mime mail permissions too. Edit That permission is only a drupal 6 thing.

Update

In regards to your plus - space issue, what happens if you comment out the line

  $url = str_replace('+', '%2B', $url);


in the  _mimemail_url function in the mimemail.inc file?