I have another idea. You could put the 155 kb limit away but keep the 650kb max limit. So the more shots, the less size. It would help in retaining quality allot
This has come up a few times, and I think it would be a good idea. I'm not entirely sure why it wasn't taken up though. Although, in such events as the screenshot contests, it means that when the finalists are posted, there will be a large page to load. This doesn't concern most users, who are using super fast broadband, but there are some members who are probably using dial-up or pay-per-MB connections. An alternative would be to have a small and large entry (one suitable for the finalists), but then you might as well just post the small version and have a link to the larger file... Which is something that people do anyway!
An automated upload scaler isn't a new invention, but it is a bit tricky. There are plenty of websites that will automatically compress images, or produces images of varying size; Flickr does this, and produces something like 5 photo sizes, plus the original. I would imagine that there is some free forum plugin for this sort of thing, but it also means that the server memory usage will shoot up, and the memory per image (as you'd have copies) would also go up.
I guess the best thing to do would be to survey the members to see what connection is being used (this was done a while back, but a review might be in order). The automatic scaling will be largely down to finding the right software plugin, and ensuring there is enough space. But some sort of script that loads small images for members who choose it, and large images for those who want the full fat version, would be possible. It could be one of the profile options for each member. But yeah, not a simple procedure.