Made a video showing the issue:
VIDEO
This only happens in this particular project, and only for images that have been present in the project for a while -> if I drag a new image into the project and follow the same steps as the video, it works fine.
At one point in my project I moved all of the images to another folder (like from "/images" to "/images/newfolder"), and then did a Find->Replace to update the references to the new image paths. I think this issue is only happening with images that had their image path changed.
Any help would be greatly appreciated, there are hundreds of images in this project and I can't go through and manually rename them all.
EDIT:
Another tidbit of info in this video:
VIDEO