The code in the function example has a slight problem: most browsers will automatically underline any whitespace between the <a> and </a> tags. You can get rid of this whitespace using the compress tag:

<compress>
    <a href="${url}">
    <if preferences.showImages>
        <img src="${image}" border="0" alt="${alt}">
    <else>
        ${alt}
    </if>
    </a>
</compress>

This removes all whitespace not occuring inside tags.

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