I've tried this scenario using the bundled Derby database and it functions as expected. I can successfully read a blob and insert it into another database. I even tried writing it out to a binary file to ensure that the image that I was moving was still intact.

It looks to me like you may not be passing in the correct information or referencing it correctly. In your first post, you show the binary contents coming back in the <FILE_TEXT> element. Is <FILE_TEXT> a child element of <DBT_C_IN_FILE>?

It might be helpful if you zipped up your BizComponents that get and write your Blob and attach them here so I can verify the mappings.