Great news this seems to have been fixed in the Gold code!! My errors were with 8.5.3 cd5
First This is one of my favorite features in 8.5.3, but there is on caveat i have found just this past weekend.
When “Use Runtime Optimized CSS an JS Resources” is checked on the XPage tab on application properties,
and you have a css file that refferences an image like
It will NOT display the image.
For some reason the browser thinks the image is a css file, and not an image. It even puts it in a css named folder. To get around this include those styles on the page instead of in a css file. I will submit this to IBM to see if we can get it fixed.