Are Small Text buttons level 2 compliant

To the people of WCAG,

Many sites use small buttons, menus or tabs that have text as images, e.g.

FAQs, Our Team, About Us, Consumer Products, Web Sites, Computers, Welcome, 
News, How-to, Connect,

(this is a mixture from several web sites)

Do these pass the following priority 2 checkpoint? [1]
3.1 When an appropriate markup language exists, use markup rather than 
images to convey information. [Priority 2] For example, use MathML to mark 
up mathematical equations, and style sheets to format text and control 
layout. Also, avoid using images to represent text -- use text and style 
sheets instead.

I contend no, small image buttons/menus/tabs fail this checkpoint: since an 
accessible markup exists, viz. ordinary HTML.  Plus the last sentence 
explicitly says to not use images for text.

Feasible methods exist. You can get rid of the link underline, and control 
color and font with a stylesheet.  Rectangular buttons are easy.  If you 
want something a bit fancier like rounded corners, it's straightforward to 
piece together the text parts with slivers of images.  That's a bit of a 
kluge, but in balance I think it's better than making the whole thing text, 
given the importance of that checkpoint to people with low vision, who can 
otherwise simply enlarge the fonts and/or change the colors.  (Loads faster 
too).

I expect some objections to this position, since a number of well known 
sites in the disability area use such images, so there are clearly folks 
who didn't think this was a violation.

By the way, the one place I would allow text as images are in logos, where 
there are substantial reasons for making the look exact.

Len

p.s.
This isn't an academic question for me: e.g. full WCAG is now Pennsylvania 
State Policy, so we've got to know if image folkder tabs are "legal".

[1] 
http://www.w3.org/TR/1999/WAI-WEBCONTENT-19990505/#gl-structure-presentation
--
Leonard R. Kasday, Ph.D.
Institute on Disabilities/UAP and Dept. of Electrical Engineering at Temple 
University
(215) 204-2247 (voice)                 (800) 750-7428 (TTY)
http://astro.temple.edu/~kasday         mailto:kasday@acm.org

Chair, W3C Web Accessibility Initiative Evaluation and Repair Tools Group
http://www.w3.org/WAI/ER/IG/

The WAVE web page accessibility evaluation assistant: 
http://www.temple.edu/inst_disabilities/piat/wave/