I found a way to do this using the built in appcmd.exe tool. If you wanted to change your virtual directory "Images" inside your application "OldApplicationName" type this into the command line.
%systemroot%system32inetsrvappcmd set vdir "Default Web Site/OldApplicationName/Images" -path:/Images2
More details, including how to rename applications here: http://www.foliotek.com/devblog/rename-applications-and-virtual-directories-in-iis7/
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