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Good one Alan!

personally I find it works best to name them as you listed in #1 since when you mouse over the images it will show that text. you may also title it to be more descriptive so the user know what they are being linked to. the alternate text you want to be the text you would use as if it was a text link, so also the format of #1 however the difference from the title choice is that the title may be better to be more descriptive to improve the user experience. hope this helps

Thank you Ryan.