Having a $product instance and a $base64 image, how can I set it's thumbnail image?

I'm currently creating a grouped product via a custom API on Magento (API_v2).

My application sends a SOAP request with all the informations I need:

1. Name
2. Sku
3. StoreURL
4. Description
5. Image1 (Base64)
6. Image2 (Base64)
7. Some custom attributes
8. Array with data for simple products

The new endpoint uses new Mage_Catalog_Model_Product(), then I manually call multiple ->setAttributeName(value) then finally -save().

Doing that via Admin Painel, the image is stored inside ./media/catalog/product/b/o/image.jpg, but I don't think that path is hardcoded.

I know the method $product->setThumbnail($image) exists among with setBaseImage() and setSmallImage(), but I'm having issues to pass an $image argument.

---

Is it absolutelly necessary to upload my base64 to a CDN before saving it?

Can I save it locally then somehow upload programmaticaly?

take a look at this api method ('product_media.create') from magento core. It does exactly what you strive to achieve.

public function create($productId, $data, $store = null, $identifierType = null)
{
    $data = $this->_prepareImageData($data);

    $product = $this->_initProduct($productId, $store, $identifierType);

    $gallery = $this->_getGalleryAttribute($product);

    if (!isset($data['file']) || !isset($data['file']['mime']) || !isset($data['file']['content'])) {
        $this->_fault('data_invalid', Mage::helper('catalog')->__('The image is not specified.'));
    }

    if (!isset($this->_mimeTypes[$data['file']['mime']])) {
        $this->_fault('data_invalid', Mage::helper('catalog')->__('Invalid image type.'));
    }

    $fileContent = @base64_decode($data['file']['content'], true);
    if (!$fileContent) {
        $this->_fault('data_invalid', Mage::helper('catalog')->__('The image contents is not valid base64 data.'));
    }

    unset($data['file']['content']);

    $tmpDirectory = Mage::getBaseDir('var') . DS . 'api' . DS . $this->_getSession()->getSessionId();

    if (isset($data['file']['name']) && $data['file']['name']) {
        $fileName  = $data['file']['name'];
    } else {
        $fileName  = 'image';
    }
    $fileName .= '.' . $this->_mimeTypes[$data['file']['mime']];

    $ioAdapter = new Varien_Io_File();
    try {
        // Create temporary directory for api
        $ioAdapter->checkAndCreateFolder($tmpDirectory);
        $ioAdapter->open(array('path'=>$tmpDirectory));
        // Write image file
        $ioAdapter->write($fileName, $fileContent, 0666);
        unset($fileContent);

        // try to create Image object - it fails with Exception if image is not supported
        try {
            new Varien_Image($tmpDirectory . DS . $fileName);
        } catch (Exception $e) {
            // Remove temporary directory
            $ioAdapter->rmdir($tmpDirectory, true);

            throw new Mage_Core_Exception($e->getMessage());
        }

        // Adding image to gallery
        $file = $gallery->getBackend()->addImage(
            $product,
            $tmpDirectory . DS . $fileName,
            null,
            true
        );

        // Remove temporary directory
        $ioAdapter->rmdir($tmpDirectory, true);

        $gallery->getBackend()->updateImage($product, $file, $data);

        if (isset($data['types'])) {
            $gallery->getBackend()->setMediaAttribute($product, $data['types'], $file);
        }

        $product->save();
    } catch (Mage_Core_Exception $e) {
        $this->_fault('not_created', $e->getMessage());
    } catch (Exception $e) {
        $this->_fault('not_created', Mage::helper('catalog')->__('Cannot create image.'));
    }

    return $gallery->getBackend()->getRenamedImage($file);
}