Is there a way to set the email client to always download images in HTML messages? I've looked all over and can not find any such setting.
This is not possible.
The choice of Microsoft not to support this is security. If you download html or images automatically the sender could see if you read the message for example by checking if you downloaded the image.
Hotmail supports whitelisting senders. would be great if you could also do this on your Windows Phone device but that's currently not possible