Sadly doesn't work, drives me crazy in here.
Edit:
Instead, what I did was as follows:
In the theme folder, find category.tpl and open it.
Search for the "thumbnail" div block and replace the image source with the following:
Afterwards while inspecting your DOM, you'll find out that your image has the following source:
Upload your wanted thumbnail to /img/ under the name of the generated source.
Uploading the thumbnails via your dashboard will still not work.