<define-property name="gwt.imageResource.maxBundleSize" values="1000" />
You are creating a new property here, not assigning a value to an existing property. I don't know why the error is happening, but rest assured that even if the error wasn't happening, you'd still not be setting the value you are trying to set. Because...
private static final int IMAGE_MAX_SIZE = Integer.getInteger(
"gwt.imageResource.maxBundleSize", 256);
that code doesn't read from your gwt.xml file. From the javadoc for Integer.getInteger
:
/**
* Determines the integer value of the system property with the
* specified name.
According to this, you should be setting a system property when you run the compiler (or dev mode). Adding this to the JVM args might look something like this:
-Dgwt.imageResource.maxBundleSize=1000