Images garbled via virtual URL, OK via physical URL?

Have had a search, but can’t find a match for this.

Since yesterday, uploaded images are not displaying on the site, but the image files in the upload directories are fine.

Browsing to the virtual URL of an uploaded image returns a garbled screen, looking like the encoding has gone wrong.
Example: http://edubuzz.org/files/2010/09/edubuzz-whats-on-button.jpg

Browsing to the same image using its physical URL works correctly.
http://edubuzz.org/wp-content/blogs.dir/1/files/2010/09/edubuzz-whats-on-button.jpg

I raised a ticket with hosts, who suggested installing fresh WordPress code, which I did. I kept .htaccess, though, as normal. Am I right to think that the test above suggests a fault with Apache, or could WordPress be involved? Can’t see how anything more than .htaccess rewrite rules are involved here.

Have also tried:
– temporarily renaming wp-content/plugins and wp-content/mu-plugins
– completely deleting plugin updates done yesterday

Other factors:
– Had been trying http://wordpress.org/extend/plugins/resize-images-before-upload/ yesterday, but had removed it before noticing the issue. Cannot see how that could be affecting things, although it may have left DB tables behind…