Finally, I've tracked it down and have a work-around!

The problem comes from the fact that I also have evolution-rss
installed.  Something in there, possibly due to gtkhtml / webkit
rendering, stops Evolution from sending emails with inline images or
embedded images.  Removing this package and completely restarting
evolution (using --force-shutdown) means it now works as expected.

Should be flagged as a bug in evolution-rss package then, even though it
affects the functionality of Evolution?

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inline images do not go out when sending emails in evolution
https://bugs.launchpad.net/bugs/452874
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