The issue, in my opinion, is related to the “newer” media upload panel (multi-file uploader). I get this error (like everybody else):
This image cannot be processed by the web server. Convert it to JPEG or PNG before uploading.
If you upload the file via browser upload
/wp-admin/media-new.php?browser-uploader
the WordPress properly adds (single) file to it’s media catalog without any errors.
K
