The only limitation I've found is that the standard ppmtosixel conversion tool spits out 8-bit control-characters, but xterm seems to only recognise their 7-bit equivalents (hence the sed command in that screenshot).
It won't let me edit the comment, but I should throw in: xterm must be compiled with `--enable-regis-graphics` (or `--enable-sixel-graphics` for sixel graphics) for it to work. Your distro's xterm might not have been compiled with those flags.
This was the case for me, but rebuilt from source and it worked fine. Given the code exists I wonder why it isn't more common in terminal emulators. Its really handy when you want to pop up a simple picture or a line drawing.
