How to show Plots or Graphics in mini MMA HTTP Server?

Very often SVG makes sense, it will scale well with magnification. This idea does not deserve a separate answer so additionally I rewrote the code in a more idiomatic style:

server = SocketListen[8000
, Function[{assoc}
  , Module[
      { client = assoc["SourceSocket"], inputString, response}

    , inputString = ImportString[assoc["Data"], "HTTPRequest"] @ "Query" // Lookup["expr"]

    ; response = GenerateHTTPResponse @ ExportForm[
        ToExpression[inputString], "SVG"
      ]

    ; WriteString[client, ExportString[response, "HTTPResponse"]]

    ; Close @ client
    ]
  ]      
]

(* DeleteObject[server]
   Close[server["Socket"]]
*)

You can get it to respond with images by doing the following:

server = SocketListen[8000, 
  Function[{assoc}, 
   Block[{client = assoc["SourceSocket"]}, 
    Block[{html, expr}, 
     expr = First@
       StringCases[assoc["Data"], 
        RegularExpression["GET /\\?expr=([^ ]+)"] -> "$1"];
     response = ExportString[ToExpression@URLDecode@expr, "PNG"];
     WriteString[client, 
      "HTTP/1.1 200 OK\r\nDate: " <> DateString[] <> 
       "\r\nContent-Type: image/png\r\nContent-Length: " <> 
       ToString@StringLength@response <> "\n\n" <> response];
     Close[client]]]]]

I've made 2 changes - first is to change the response Content-Type to image/png. Otherwise the browser doesn't know the response is an image.

Next I used ExportString[..., "PNG] to get MMA to respond with the string representation of an image, which, when coupled with the Content-Type change, will render correctly in a browser, as below.

To your broader question - in my opinion, to make this a real-live web server is a ton of work and probably not worth it when CloudDeploy and family exist.