Here's ultimately what I ended up doing, so that a wallpaper on my site wouldn't take up 2 monitors worth of real estate:
in your template's directory, there's a folder /media/ open it, and edit the image media types to:
<a href="{media_src}"><img class="imagesize" src="{media_src}" border="1" alt="{image_name}"/></a><br />
then, in your style.css for your template, add this to the very end:
.imagesize
{
vertical-align: text-top;
margin-top: 10px;
margin-bottom: 10px;
border: 1px solid #333;
max-width: 750px;
width: expression(this.width > 750 ? 750: true);
}
then you should end up with images that only take up 750 width, and have a link to the 'full' version. Sadly, you're not saving any bandwidth, because all you're doing is loading the original larger image in a smaller area. It works for me though.
disclaimer: I found the code / method via google, so I can't really offer too much help with it.