I use this method as an image replacement.
It works good for single images, sprite technique, users with disabled images or JS don't suffer.
However, I once read (somewhere, don't remember now) that text content that is hidden, covered with image might be not good from SEO perspective. Is it true or was it true? Any experiences on this field?
I know that some companies tried to cheat like that and hide tons of keywords under banners. As far as I remember Google used to banned such websites. However, image replacement used for buttons or labels/titles should be treated as a technique for cheating by SE.

I work for a big project now and would like to make sure that I don't get banned or something for such stupid thing.