I've had a similar need of changing the mediaType associated with nodes. There is the option in the context menu of the Content tree, but nothing similar in the Media tree GUI. Have you found a good way to make this happen and refresh all of the cache/xml associated with them?
I do have suggestion if you went with the route of creating new media nodes to get the new type in place. You mention in a comment, duplicating images to place them as children in the new folder and this messing up references to the images. There is a "Move node" option in the GUI, which will keep the same nodeID for your child images, and thus any references to them. Programatically, I think this would involve updating attributes for the image node, and making sure trees.config gets refreshed.
<ChildImage id="4099" parentID="4098" level="4" creatorID="2" sortOrder="0" createDate="2014-10-16T10:32:07" updateDate="2015-05-05T14:32:15" nodeName="Cutler - 101" urlName="my-image" path="-1,3285,3287,4098,4099" isDoc="" nodeType="2887" writerName="admin" writerID="2" version="03d9a03d-4cc5-4e27-b9ff-6651362e264b" template="0" nodeTypeAlias="ChildImage">
The attributes I believe that would need changing are parentID and path