<!-- Love localstack? Please consider supporting our collective:
👉  https://opencollective.com/localstack/donate -->

# Type of request: This is a ...

[ ] bug report
[x] feature request

# Detailed description

The API Gateway response body only accepts strings. To transfer binary data, it needs to be base64 encoded, inserted as a string in the response body and the flag ´isBase64Encoded´ must be set. Once this is done API Gateway will base64 decode the response and return the binary content to the requester.

## Expected behavior

When setting the isBase64Encoded flag, the response is base64 decoded before being returned from API Gateway.

## Actual behavior

Setting the isBase64Encoded flag has no effect, the response body will contain the base64 encoded string instead of binary data.

# Steps to reproduce

## Command used to start LocalStack

Docker compose config:
```
version: '2.1'

services:
  docker-host:
    image: qoomon/docker-host:2.5.0
    cap_add: [ 'NET_ADMIN', 'NET_RAW' ]
    mem_limit: 20M
    restart: on-failure
  localstack:
    image: localstack/localstack:0.12.10
    depends_on: [ docker-host ]
    ports:
      - "4566:4566"
      - "4571:4571"
    environment:
      - DOCKER_HOST=unix:///var/run/docker.sock
      - HOST_TMP_FOLDER=${TMPDIR}
      - DATA_DIR=${TMPDIR}/data
      - DEFAULT_REGION=eu-west-1
      - LAMBDA_REMOTE_DOCKER=0
      - LAMBDA_EXECUTOR=docker-reuse
      - LAMBDA_DOCKER_NETWORK=scripts_default
      - AWS_CBOR_DISABLE=true
    volumes:
      - "${TMPDIR:-/tmp/localstack}:/tmp/localstack"
      - "/var/run/docker.sock:/var/run/docker.sock"

```

## Client code (AWS SDK code snippet, or sequence of "awslocal" commands)

Need to set up a Lambda Rest API that returns a base64 encoded string, where the flag `isBase64Encoded` is set. The returned response should reflect the base64 decoded version of the string.

)
        self.assertEqual(rs['ResponseMetadata']['HTTPStatusCode'], 200)
        rs = apigw_client.get_domain_name(
            domainName=domain_name
        )
        self.assertEqual(rs['ResponseMetadata']['HTTPStatusCode'], 200)
        self.assertEqual(rs['domainName'], domain_name)
        
        apigw_client.delete_domain_name(domainName=domain_name)
    def _test_api_gateway_lambda_proxy_integration_any_method(self, fn_name, path):
        self.create_lambda_function(fn_name)
        
        lambda_uri = aws_stack.lambda_function_arn(fn_name)
        target_uri = aws_stack.apigateway_invocations_arn(lambda_uri)
        result = testutil.connect_api_gateway_to_http_with_lambda_proxy(
            'test_gateway3', target_uri, methods=['ANY'], path=path, stage_name=self.TEST_STAGE_NAME)
        
        path = path.replace('{test_param1}', 'foo1')
        url = gateway_request_url(api_id=result['id'], stage_name=self.TEST_STAGE_NAME, path=path)
        data = {}
        for method in ('GET', 'POST', 'PUT', 'PATCH', 'DELETE', 'OPTIONS'):
            body = json.dumps(data) if method in ('POST', 'PUT', 'PATCH') else None
            result = getattr(requests, method.lower())(url, data=body)
            if method != 'DELETE':
                self.assertEqual(result.status_code, 200)
                parsed_body = json.loads(to_str(result.content))
                self.assertEqual(parsed_body.get('httpMethod'), method)
            else:
                self.assertEqual(result.status_code, 204)
    def test_apigateway_with_custom_authorization_method(self):