The first time I upload via Rackspace, the thumbnails on the backend appear fine.
However, if I delete the expressionengine/cache directory and it regenerates the images, the result is 70 byte 'jpgs' are created in expressionengine/cache/assets/rs_sources with the following content
<html><h1>Not Found</h1><p>The resource could not be found.
- i.e. the response you would get from Rackspace if the image cannot be found.
However, the images are available and accessible (right click -> View file returns the correct image with a Rackspace URL). They also appear fine on the front-end, so it's just the process which deals with the generation of thumbnails for the backend.