Claude Code's Read tool fails with API Error 400: "Could not process image" when reading:
- PNG files with transparency (the #1 trigger)
- Large images (>30KB) — especially when reading multiple images in one session
- Images with unusual encoding (Selenium screenshots, macOS native screenshots, RGBA PNGs)
Once this error enters the conversation context, the entire session breaks permanently — every subsequent message fails with the same error. Recovery: press Esc Esc to open Rewind menu and restore conversation before the error, or /clear (loses all context).