I wrote a C++ Program that can convert an image into an HTML Table. Click Here to see an animation showing how the picture quality decreases as the compression threshold increases.
You can download the exe here. Run it at the command line for instructions on how to use it.
The resulting HTML Table does not have to be blocky. There can be one 1x1 Table cell for each pixel in the image but it makes a very large web page, some as big as 10 or 20 MB! Browsers choke on Tables that large and tend to crash, often taking your operating system with it.
So small images work better or images that display well in low resolution.
Here are some examples. If you hover the mouse over an image you'll see a tooltip with a number representing the size of the HTML file. I tried to keep the HTML file under 350 kbs.