CiCiVacation The maximum size of image that may be uploaded is 5MB. We have the application resizing uploaded images so the longest side is 1080 pixels (almost HD quality!) After re-encoding, this was resulting in test image sizes around 150KB. I haven't looked at the "real" images that been uploaded since the site went live yet but we can make adjustments if needed.
Thumbnailing is an option. @blown_dry liked the larger images but I mentioned there are other presentation methods, including thumbnails with "click to embiggen", so she put the question to you folks.
Watermarking is also an option. As far as I can see, we could add a single sitewide watermark but it wouldn't include the poster's username. There may be another extension that could add that capability.
We should probably move any additional discussion along these lines to the Feedback forum.