The following xaml works ok inside a Window:
&l
When the XAML parser creates CroppedBitmap, it does the equivalent of:
var c = new CroppedBitmap();
c.BeginInit();
c.Source = ... OR c.SetBinding(...
c.SourceRect = ...
c.EndInit();
EndInit() requires Source to be non-null.
When you say c.Source=..., the value is always set before the EndInit(), but if you use c.SetBinding(...), it tries to do the binding immediately but detects that DataContext has not yet been set. Therefore it defers the binding until later. Thus when EndInit() is called, Source is still null.
This explains why you need a converter in this scenario.