fyi, :raw turns off buffering too, that's why I used :raw:perlio.

You also only read up 'til the first \x0A. Not very useful.

I tried a similar route before coming to the monastery

Similar, but worlds apart. Did you actually try the code we provided, or did you just dismiss them as similar enough.

I really tried them both, using copy-and-paste into vim for your solution. :( I will post my full code shortly.
fnord

You missed

local $/;
[download]

Here is my test code. "foo.png" is a 323KB file in the cwd.

#!/usr/bin/perl -w

use strict;
use Net::Twitter;

$\ = "\n";

my $img = "foo.png";

# Translate image to a raw format
my $raw = do {
   open ( my $fh, '<:raw:perlio', $img )
      or die "Can't open image file $img: $!";
   local $/;
   <$fh>;
};

# Create a connection to twitter
my $twit = Net::Twitter->new( { 
                username => "fake_uid",
                password => "fake_pwd",
                } );

# Post the image file
$twit->update_profile_image( $raw );

# Grab the error hash ref and roll through it
my $err = $twit->get_error;

foreach my $key ( sort keys %{ $err } ) {
    print STDERR "$key => $err->{ $key }";
}
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And the dump of the $err hash ref:

error => There was a problem with your picture. Probably too big.
request => /account/update_profile_image.json
[download]

The "probably too big" is not a very good error message, is it? :) I also tried it with a 5px x 5px file and it spat out the same error. As I said earlier, the connection to twitter is working, because I can successfully post using the update() method.

Thanks for posting your code and the errors. I don't see anything obviously wrong with your code. These are the only suggestions I can think of:
1. Try printing $raw to a local file and see if you can successfully view it with an image program.
2. Google around to see if Twitter's API might be broken for that function.
Good luck!

---
It's all fine and dandy until someone has to look at the code.