Should be able to only uncheck Protect Mail Activity
According to Apple info regarding Protect Mail Activity, photos and graphics should still download even if Hide IP Address is still on as long as Protect Mail Activity is off. This, however, is not the case, as I tried it and even after rebooting the photos and graphics were not downloading. The problem with turning off Hide IP Address is that senders can collect information about you and your mail activity, including your IP address. So I think this is a bug. I am using an iPad Air 5 running iOS 17.5.1. This problem just started for me.
iPad Air, iPadOS 17