ErrorDocument 404 /folder/default.jpg
Your explanation appears to show a misunderstanding of what this directive does. This particular directive will return
/folder/default.jpg for any request (in this directory tree) that results in a 404, ie. does not exist. It defines the 404 error document.
Changing this to 302 does not make sense. You are simply removing the 404 error document (a 404 status is still returned but without the intended error document, ie.
default.jpg). 3xx status are not error states, they are "redirection" states and require a corresponding
Location HTTP response header.
By the sounds of it you perhaps want to "redirect" to the
/folder/default.jpg image when an image that does not exist is requested? Instead of triggering a 404? For this you could specify an absolute URL (as noted by @Stephen in comments), or use mod_rewrite
RewriteCond. However, using the 404 error document in the conventional way would be the preferred approach here I think.