ugly nginx rewrite

nice-try.conf

   server {
        listen IP-ADDRESS:80;
        root /root/path;

        location ^~ /img {
                rewrite  ^/img/([a-z0-9])([a-z0-9])([a-z0-9])(.*)$ /repository/images/$1/$2/$3/$1$2$3$4 last;
        }

        location /repository/images {
                if (!-e $request_filename) {
                        rewrite ^/repository/images/(.)/(.)/(.)/(.*)$ /api/image.php?filename=$4;
                        proxy_pass         http://IP-ADDRESS:8080;
                        break;
                }
        }

        location ~* \.(?:jpe?g|gif|png|ico|css|js|pdf|flv|mp4|swf|mp3|zip)$ {
                expires max;
                add_header Pragma public;
                add_header Cache-Control "public, must-revalidate, proxy-revalidate";
        }

        location / {
                proxy_pass   http://IP-ADDRESS:8080;
        }
    }

working-rewrite.conf

   server {
        listen IP-ADDRESS:80;
        root /root/path;

        location ^~ /img {
                rewrite  ^/img/([a-z0-9])([a-z0-9])([a-z0-9])(.*)$ /repository/images/$1/$2/$3/$1$2$3$4;

                if (!-e $request_filename) {
                        rewrite ^/repository/images/(.)/(.)/(.)/(.*)$ /api/image.php?filename=$4;
                        proxy_pass         http://IP-ADDRESS:8080;
                        break;
                }
                expires max;
        }

        location /repository {
                expires max;
        }

        # Serve static files directly
        location ~* .+\.(txt|gif|jpg|png|jpeg|ico|css|js|pdf|flv|mp4|swf|mp3|zip)$
        {
            expires max;
        }

        location / {
                proxy_pass   http://IP_ADDRESS:8080;
        }
    }