Yes, you could have done similar with GIFs already with Netscape 3 and IE 3 (I think, IE 3.1, or was this just the Mac version?). "Dynamic HTML" with z-layering became a thing with Netscape 4.0 and Internet Explorer 4.0, which became available in Summer/Fall 1997. With this, relative positioning and proportional text (at variable character width) wouldn't have been a problem.

(With the NS/IE 3 generation, you would have been limited to lines of prepositioned fixed-width characters in a table. So, not really applicable for this.)

I think, the decisive factor may have been badly managed CRTs tending to display greys with a somewhat reddish hue (esp. on Windows, not so much on Macs with a screen gamma of 1.8) and JPEGs generally enjoying better color support. (JPEG was displayed at sRGB or at any embedded IEC profile, which wasn't available for GIF, where the effective color was pretty much hit and miss. So, if you had HTML text with a defined hex-color, a GIF of the same color wouldn't match, while a sRGB JPEG would. Matching JPEG and GIF colors would have posed a similar problem. A reddish hue on grey looked kind of cheap and brownish text was probably the last thing Apple would have wanted.)

Yeah, transparency on gifs is binary, so you always had a crunchy edge. Plenty of use cases, but nice looking text wasn't one of them.

And position: absolute did not behave the same way across IE, NN, FF, or safari.

For some reason I feel the sudden urge to have a drink.

Just don't tell the kids about how eCommerce used to work. Credit card number in an email, courtesy of Mal's eCommerce? Pretty much industry standard. shudders, swigs