I was asked a question about theming linked images and gave the wrong answer, that it was a known pain point, but it kept bugging me because i was pretty sure i was not remembering something. The failure of link render arrays i was thinking of is their use in item_list, but in fact there is a secret theme function that can be used to put linked images in a render array properly.
Thanks to the amazing Morbus Iff for documenting using theme_image_formatter in a render array: