I can confirm that there is no face.jpg loaded on a dedicated server. Even after reducing it to 90 kB and setting the limit to 1 MB, no one is able to see the face.jpg. Instead the head remains untextured for everyone.

Not sure about self hosted, but in SP it is loaded normally.

This has to be a bug because if you're jpg exceeds the server limit, you should be kicked. However, you can still play without a face.