When an image triggers the bad image list, the pipe side of the link is inserted raw as the link text as if it were a regular link.
This is less than ideal, and results in very broken rendering when parameters such as "thumb" or a pixel size are used. For instance this link:
[[Image:Intimpiercing Frau Klit vorhaut.jpg|thumb|250px|Horizontal clitoral hood piercing.]]
renders as the text:
|thumb|250px|Horizontal clitoral hood piercing.
when what might be expected would be just the caption text:
Horizontal clitoral hood piercing.
There are a couple possible ways to deal with this. One would be to go ahead and run the link through Parser::makeImage()'s parameter processing and try to strip out any contained markup from the caption. This would maintain the current behavior in most simple cases (where a simple caption with no markup is present but no other parameters), while providing a relatively expected result when there's some light markup or use of parameters.
Another possibility would be to change the rendering to something like standard thumb/frame rendering, with a little click-through icon or explanatory note.