webMethods support gave us a hand in fixing this. After importing java.io.InputStream and java.io.BufferedInputStream, the following java solves the problem:

IDataCursor idc = pipeline.getCursor();

if ( idc.first(“ffdata”) )
{
//Create BufferedInputStream from inbound InputStream
BufferedInputStream bis = new BufferedInputStream( (InputStream)idc.getValue() );

//Insert bufferedInputStream back into pipeline
idc.last();
idc.insertAfter(“bufferedIS”, bis);
}

// Clean up IData cursors
idc.destroy();