for what it’s worth, i’m able to replicate this on a collection project. i’m noticing, too, that the reversion is specific for a given file extension. so you could probably work around the problem by using a different kind of image file for your new image. for example, if the original image was .jpg, replace it with a .png image. (of course, you will have only a limited number of file extensions to work from.)
by the way, this might be the same problem that was reported as https://forum.inaturalist.org/t/cant-change-project-icon-image/32916.
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UPDATE: i noticed that the new image does eventually get replaced later at some point. (it seems to be related to some sort of delay / caching on the server, as opposed to any caching happening on the client browser.) so maybe if you just wait long enough, that is a solution, too. did your icon eventually get replaced, too?