Cannot use imagefield/filefield widgets in modal dialog

I have a form that is loaded in a panels pane configuration modal dialog and the form uses fields. Generally the form works just as expected unless an imagefield or filefield widget is added to the form. Uploading an image breaks the form. If the form is filled out and an image is selected, but the "upload" button is not clicked everything operates according to plan. The problem is created when the "upload" button on the file field widget is clicked. The image will upload as expected and the form can then be submitted, however none of the form elements are saved and the submit handler for the form is never executed.

A dpm() of $form_state and $form inside of the drupal_process_form() function that is called at submit time yields a few key differences in the state of the form.

$form and $form_state differences in the scenario that doesn't work

$form['#submit'][0] = 'fieldable_panels_panes_fieldable_panels_pane_content_type_edit_form_submit';

$form_state['submit_handlers'][0] = 'file_managed_file_submit';
$form_state['submit_handlers'][1] = 'file_field_widget_submit';
$form_state['values'] = array(
   field_image,
   field_image_und_0_upload_button,
);

$form and $form_state differences in the scenario that does work

$form['#submit'][0] = 'fieldable_panels_panes_fieldable_panels_pane_content_type_edit_form_submit';
$form['#submit'][1] = 'ctools_wizard_submit';

$form_state['submit_handlers'] // doesnt exist;

$form_state['values'] = array(
  'return',
  'cancel',
  'title',
  'field_body',
  'field_image',
  'form_build_id',
  'form_token',
  'form_id',
  'op',
);

So i have dug as deep as drupal_process_form() a little bit into that function form_execute_handlers is executed, and according to its source if $form_state['submit_handlers'] exists it executes those callbacks and ignores $form['#submit'] which explains why my submit functions are not getting called. And based on the state of $form and $form_state im guessing that when the upload button is clicked, its ajax event is called, it does what is required to upload the file and set the form state, but the form is not getting rebuilt after the ajax callback returns its data. This is my best guess at least.

This is were the water gets murky for myself. How could ctools be impacting this form and preventing the proper submission of this form?

Any help would be greatly appreciated.