As far as I can see, it depends on the terminal emulator used.
I am not an expert about this, but it is the default available through Fedora server36 itself - is there a command to know what is the current emulator and how change it? It to let me do a research and see if exists a possible consequence if it is changed.
On Terminator it doesn’t work for me, on Alacritty it doesn’t work as well, but images are correctly displayed using xterm
Thanks for that data - I hope it can be changed in some way for Fedora Server. If is not possible, perhaps do other setting.