SOLUTION
Access Onedrive via web portal (PC)
I created a 2nd root folder I named Pictures B (you can name it whatever you want).
I then moved all my subfolders from the default 'Pictures' folder to the new 'Pictures B' folder.
Then I had to go through and change the properties of each and every subfolder, one at a time, to 'Pictures' type.
To be clear, all the properties/file types were already set to 'Pictures' when they were under the default Pictures folder, but moving the folders reset the properties to Documents. So it is indeed a bug to begin with, but one that is fixable.
After all done, I went back and deleted the original (and now empty) default Pictures folder... however, when you reload OneDrive, it auto-creates that default Pictures folder, so its always there.