The corner resize handles capped how small an overlay could shrink but not how large it could grow. Dragging a corner outward could size the image past the recording frame, and the position clamp that ran afterward could only slide the box back within bounds - it couldn't shrink an overlay that was simply too big to fit, so oversized overlays still overflowed the frame and were rejected on save.
Resizing now caps growth at the frame edge on the side opposite the handle being dragged, so an overlay can never be enlarged past the frame in the first place.