I have the same problem. Until recently I always used iTunes to rip my CDs into ALAC, discarding iTunes' cover art and instead appending manually one cover art in the 900x900 pix dimensions. JRemote never had a problem reading these files when streaming from Media Center.
However, I recently switched to a bit-perfect ripping solution EAC (Exact Audio Copy) to improve the quality of my rips. Now for the first time ever JRemote is not playing my ALAC files that have been ripped with EAC software that uses FFMpeg as external encoder for ALAC. After the ripping/ALAC conversion, I embed in the files the cover art manually using iTunes, in a 900X900 size (typically ~300-350kb). The files play perfectly fine on my PC in JRiver Media Center (and any other PC audio app) as well as PlexAmp on my iPhone but JRemote gives the streaming error. I even tried to reduce the size of the embedded cover art into 600x600pix. No change. It's a pity. Unless there is a fix for JRemote, I think I am retiring JRemote and switching to PlexAmp for streaming onto my iPhone... :-(