IPX: File not found when using assets directory

I'm using Nuxt 3.7.3, Nuxt image 1.0.0-rc.2

In a component, providing image from assets directory as src prop of does not render image, I see "404 IPX: File not found" error in JS console.
Same image with <img> tag works correctly.

This works:
<img src="~/assets/img/banners/front-page-banner.png" alt="Banner" />

This does not work:
<NuxtImg src="~/assets/img/banners/front-page-banner.png" alt="Banner" />

Import also does not work. This does not work:

<script lang="ts" setup>
import banner from '~/assets/img/banners/front-page-banner.png';
</script>
<template>
  <NuxtImg :src="banner" alt="Banner" />
</template>

According documentation https://image.nuxt.com/get-started/configuration#dir I've added assets directory to nuxt.config:
dir: 'assets/img'

Now image is rendered normally using it this way:
<NuxtImg src="banners/front-page-banner.png" alt="Banner" />

But only on local development server, after building and deploying it image is not rendered and same error appears in JS console.

Start by reproducing the Nuxt 3.7.3 and Nuxt Image 1.0.0-rc.2 behavior with the assets directory and the dir: 'assets/img' configuration. Compare local development with the built and deployed application, using the NuxtImg examples in the report; done means configured assets render successfully after deployment without the IPX 404.