Set the Content-Type of your email like this:
mail($recipient, $subject, $content, "From: $email\r\nReply-To: $email\r\nX-Mailer: DT_formmail\r\nContent-Type: text/html")
I've never tried including pics in an email, but I'm sure you could use an IMG tag with an absolute reference to an image somewhere on your webserver, like:
<IMG SRC="http://www.yourserver.com/graphics/img.jpg">
So when their HTML-enabled mail client opens this up it'll go out to your web server and bring the image in.