I'm not really sure about a maximum size. But when you insert an image, you can provide the width and height dimensions to limit it to a certain size/ratio.
Where XX is the width of the image, YY is the height of the image, and the url location of the image would go where "URL HERE" is.
The reason you're seeing the 'enlarge this image' option is because you're trying to host the image instead of inserting it. If you hosted the images on say photobucket or another external image hosting service and inserted them appropriately using the code above, i think you'll get the results you want?
(There might be a way of doing it properly by directly hosting the images but I'm not too sure how that works?)
I hope this helps!