Yes there is a work-around. They use a checksum based (CRC, MD5) etc. based test to match up your image to prohibited images. If it matches a known checksum they reject your image. DMCA, you know?
The easiest way to mess this up is to just change your image slightly. If you are running Windows, just right-click the image and select Properties. Go to the Details tab and Click comments. Then add any comment, even a single character will do. Click Apply or OK. You have just slightly altered the image but not in any significant way, but the checksums are totally different!
If you have several images with the same problem just select all the images on the page (ctrl-A) and follow the above procedure. When you click Apply or OK it will do the same thing to everything on the whole set.
I believe I learned this trick at IHG. (Yes I am a long time IHG member.) You can also do a similar trick with IrfanView if you have that probram. (Good image viewer.)
I noticed your test post and realized that inviting IHG members to join our membership is working out even better than I expected (we are a recently launched website) because your experiences will help us pave the way for what we hope are many members to come.
You will notice I have added a new post to this section, Free Image Hosts
where you will find my suggestions for other image hosting sites to explore.
Meanwhile my sole objection to ImageBam remains that they do not offer thumbnails over 350px which is IMO not large enough to make a good cover. I believe a nice cover sets the beginning for a good looking post that you can be proud of.
Just to be fair I credit Greg for this information about tweaking image properties and I suggest you ask him for further elaboration.