Seems to happen more often after a restart, after the first 404s it will eventually start pulling posts properly then at some point the connection will go stale and it'll 404 again. It's pretty consistent for me. About to try it out on the latest pull. Nothing in the logs/dev mode. Just 404s in the console.
In the ACP you can give the image a class. Use cover to have it fit the box. Or you can give anything you want and then customize in the theme CSS override.