You forgot the most important factor: Whether you're reusing that image on a different page. Embedding images in the HTML is basically saving an HTTP request at the expense of not being able to cache the image separately from the HTML.
This seems like it should work, but have you ever tried it? Or, can you point me to some results of a test to show that it indeed caches the image embedded in the CSS?
The problem is that now it's going to be sent with every request. So it'll make the first page faster for the initial request, but slower in the long run.
