But the result is that all images reflect the current row's value. The current row has the correct images, but all other rows have the exact same images - not those reflecting that project's actions. If I set Sparse to .T., no image displays at all - even in the current row.

You need to add an image control for each image you want to display and then set the column's DynamicCurrentControl based on the status similar to this:

WITH THIS.MyImageColumn
  .AddObject( "imgNotStarted", "Image" )
  .imgNotStarted.Picture = "NotStarted.gif"
  .imgNotStarted.BackStyle = 0
  .AddObject( "imgInProcess", "Image" )
  .imgInProcess.Picture = "InProcess.gif"
  .imgInProcess.BackStyle = 0
  .AddObject( "imgWaiting4Resource", "Image" )
  .imgWaiting4Resource.Picture = "Waiting4Resource.gif"
  .imgWaiting4Resource.BackStyle = 0
  .AddObject( "imgDone", "Image" )
  .imgDone.Picture = "Done.gif"
  .imgDone.BackStyle = 0
  .AddObject( "imgUnknown", "Image" )
  .imgUnknown.Picture = "Unknown.gif"
  .imgUnknown.BackStyle = 0
  .DynamicCurrentControl = [IIF( SEEK( GridRecordSource.Status_fk, 'StatusLookupTable', 'StarusTag' ), 'img' + ALLTRIM( StausLookupTable.StatusDescription ), 'imgUnknown' )]
ENDWITH