I just found out that changing the extension of the image file (.jpg tested) to something like .notjpg doesn't cause the 500. Obviously, this isn't a solution but hopefully it sheds some light on the issue.
Re: Copying folders which contain images via API (from copy_ref) returns 500 errors as of September 1, 2015
This should be fixed now. Please let us know if you're still seeing any issues.
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