The bad image list was recently disabled (during site testing of an image-related issue, I believe).[1]
To my knowledge, the issue lied elsewhere and the bad image list can be re-enabled. Marking as a shell bug and assigning to Tim as he was the one to disable it.
[1] http://wikitech.wikimedia.org/index.php?diff=20518&oldid=20517&diffonly=1
Version: 1.16.x
Severity: normal