The image problem is most likely that the IMG tags contain relative links to the images - relative, that is, to the original location of the page - hence they won't be available as they don;t exist on your server.
What you could do (for the CSS problem as well) is parse the HTML read from the file and dynamically replace any relative links with absolute ones pointing to the right place. For the CSS, just strip it out.
This is likely to be quite hard though - you might consider just using frames and setting the contents of a frame to the page you're including. That way the images will load and the CSS will only affect that page.
