If you network activate, you can set Login Image for main site only but manage the Favicons for all sites.
If you site-by-site activate, you can set each sites Login Image but also manage the networks favicons.
I think you guys have this mixed up. In network activation, a super admin should be able to set all fav icons and login images for each subsite, the one whole controls branding across the network.
In site-by-site mode, each admin should only be able to set their own customizations
Right now, I can't network activate and set individual Login Images even though I can do it for favicons.