<!-- 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.

except Exception:
            body = {}
        body['path'] = event.get('path')
        body['resource'] = event.get('resource')
        body['pathParameters'] = event.get('pathParameters')
        body['requestContext'] = event.get('requestContext')
        body['queryStringParameters'] = event.get('queryStringParameters')
        body['httpMethod'] = event.get('httpMethod')
        body['body'] = event.get('body')
        if body['httpMethod'] == 'DELETE':
            return {'statusCode': 204}
        status_code = body.get('return_status_code', 200)
        headers = body.get('return_headers', {})
        body = body.get('return_raw_body') or body
        return {
            'body': body,
            'statusCode': status_code,
            'headers': headers,
            'multiValueHeaders': {'set-cookie': ['language=en-US', 'theme=blue moon']},
        }
    if 'Records' not in event:
        result_map = {'event': event, 'context': {}}
        result_map['context']['invoked_function_arn'] = context.invoked_function_arn
        result_map['context']['function_version'] = context.function_version
        result_map['context']['function_name'] = context.function_name
        result_map['context']['memory_limit_in_mb'] = context.memory_limit_in_mb
        result_map['context']['aws_request_id'] = context.aws_request_id
        result_map['context']['log_group_name'] = context.log_group_name
        result_map['context']['log_stream_name'] = context.log_stream_name
        if hasattr(context, 'client_context'):