The suggested cause for China's infavorable overseas views is due to the secretive military spending? That's the most ridiculous suggestion I've ever heard. I doubt overseas civilians worry about China's secretive military spendings. If your report is true, then Madaline Albright was most likely working for the English government and trying to make China talk more. If there is a decline in favorable views, then it is mainly due to China's lack of soft power. China's movie industry needs to become far more popular in overseas markets in line with her going economic power. China's animation industry, gaming industry, and other areas also need improvement.
As for the pictures, they might be real, possibly used as dummies to misguide foreign intelligence satellites or as early prototypes. It's not as if other countries don't know about the WZ-10 development already.
Well anyway here is a link to a summary of the report conducted by Madaline Albright.
And soft power comes in more forms than just movies, video games etc. In fact Commie China has alot more soft power in many places; mainly economic and cultural, its just that we in the west don't get to see it as much, or even understand it.
Anyway lets not get off topic, I would agree that the Z-10 is still in the prototype and evaluation stage of development which means it will still be some time until we can see this little bird in the field. This pace of development maybe a reflection of China's lack of experience in developing their own helicopters. Or it can be simiply be due to their patience. I feel it is a combination of both.