How to resolve the error when posting a new node with Image Field and Entity Reference?
In the end I changed the entity reference field to select list and posted like this:

{
 "title":"test",
 "type":"activity_photo",
 "language":"und",
 "field_node_reference":{
 "und":[1273]
 },
 "field_photo":{"und":[{"fid":"8880"}]}
}


also, I found my own modules was implementing hook_form_alter for this form, and this had further complications to be addressed to get it to work. So any hook_form_alter is something to remember when looking for similar problems.