In fact, if you are serious about supporting people with such browsers, you need to test your pages using a Live copy of Lynx, not just a Lynx Viewer as listed above. The basic issue is always to produce graphics with adequate quality for this medium, but in as small a file as possible to minimize loading time. There are tricks for optimizing web images using various graphics programs. The ALT text is for non-graphical browsers or for people who have graphical browsers but have graphics loading turned off. See Cari Burstein's guide in the HTML section above for advice about suitable ALT text.
Transparent rectangles are sometimes helpful for controlling spacing of items on a page.
Linktext is the text you want folks to see and click upon.