Hi,
thanks for keeping us in the loop,
I have edited the K2 template override category_item.php and added the default K2 code for testing if the image is displayed if added as <img> - but no, the image does not work either after filtering.
Test Code:
<div>added for testing <br/>
Original k2 tempalte image code:
<img src="<?php echo $this->item->image; ?>" alt="<?php if(!empty($this->item->image_caption)) echo K2HelperUtilities::cleanHtml($this->item->image_caption); else echo K2HelperUtilities::cleanHtml($this->item->title); ?>" style="width:<?php echo $this->item->imageWidth; ?>px; height:auto;" />
</div>
If seems it doesnt depend if the php string for the image is used as background url or standard img. Both seem to be broken and return empty strings.