Most of the images that you see in threads are hosted elsewhere. I got some free web space when I got my Virgin 24/7 dial up account, I use a bit of freeware FTP software to drop them there, then link to them. I can understand why there is a size restriction on attachements here, images take up LOADS of room. For a digital photographer 700kb might be a bit small these days, but it isn't all that compact really. I generally reduce pictures that I post to under 100kb, usually a lot less than that, that means that people on dial-up don't have to sit and wait ages for the page to load.
I don't suppose that you have any photo editing software? I have an old version of Corel and can easily resample images, reduce them down to 25% original size, then save them as jpg with 10% compression. That really knocks the size down.