I read a book that suggested using image replacement for logos instead of just inserting the logo in a div in the masterhead. The book suggested putting the info you would place in the alt tag in an <h1> element. Then using css feed the logo image to the <h1> element and a large negative text-indent so the text won't display on the screen.

This was suggested because search engines give higher weight to first level header elements. Also, this supposedly works better for screen readers.

I was wondering what is the opinion around here.

Yeah im using h1 text-indent in many cases, dont know will it make PR higher somehow, one thing is sure - you can use any font you want in this way, so your page can look cool without using any font-replacement tool

Just put a <h1> around the image. It's the same to Google. That's the honest way to do it.

Your image is a header, and it is about web hosting. Alternate text is important for those (however few) visitors who can't see images, and for search engines to know what you're about.

And don't name it logo or similar. Google checks filenames too.

I've been using text-indent technique for quite some time and I always name my images to target my keywords for which Google rewards me greatly. Each of my sites has large portion of hits from Google Image search. Although they don't convert very well they are still a tasty bonus.