Just an update. replaced the core/classes/image folder to the one that came from v1.6. I am currently using 1.7 and it is now working. Still, I would like to know why the image resize class is protected.
I think you hit a bug that is already fixed in 1.8/develop, and will be part of the upcoming 1.7.1 release.
Looking at your code, I notice you're using \Fuel\Core. You should never do that, that will ruin all core extensibility. All Fuel classes are available in the global namespace, use them as such.