File uploads are notoriously difficult to unit test.
I don't know how you fake the upload, Upload only expects data in $_FILES. You can fake a lot with just adding entries to $_FILES, but that will fail when you call save(), as PHP will not accept the data as an uploaded file as a security measure. And afaik that currently can only be faked with much difficulty.
It might be better just to mock Upload, there is no reason to unit test that as well.
But you might bump into the problem that Fuel v1 is extremely difficult to unit test due to the static nature of it's classes.
My co-worker also said to just mock Upload. I wonder if it's even worth the effort to unit test any controllers that deal with the filesystem (and forego 100% code coverage) as it would be really involved and time consuming.