When you use the Insert / Picture feature to insert an inline image, Outlook (and other MS apps such as Word and Excel) will look at the DPI setting in the image file. If your picture has a DPI setting of anything other than 96, Outlook will resize (i.e., scale and resample) your image (permanently) to 96 DPI upon insertion and there isn't much you can do about it after the fact.
The way to avoid this problem altogether is to open the image in a good image editor, set the DPI value to 96 DPI, and then save the image. If you do not resample the image when you do this, a good image editor will in no way affect the actual image content (i.e., it will remain pixel for pixel identical). After you do this, when you insert the image into an Outlook e-mail, Outlook will show it (and send it) in its original size, unless you manually resize / scale it. This is how you avoid the gratuitous "Outlook scaling, blurring, and destroying your pristine image," issue.
Searching for ways to resolve this problem took me quite a bit of time and effort. I would like to thank the following informative web site for describing both the origin of this problem and its solution:
Image resizes and becomes unsharp upon sending.
Update: The 96 dpi mentioned in my answer above is not fixed. In Windows, you can choose to set the DPI value to other settings using for example, Control Panel > All Control Panel Items > Display in Windows 7. This change affects the DPI value that MS Office products use.
If your text size is set to something other than "Smaller" (i.e., 100% / 96 DPI), you will have to use a DPI setting other than 96 DPI, depending on the text scaling factor you have set. This is especially true on laptops where people tend to use larger text settings, because their screens are much smaller (often set this way right out of the factory). For example, if you are using Medium size text (i.e., 125% of the 96 DPI value), your images will have to have their DPI setting changed to 120 in order not to get rescaled/resampled when inserted into Outlook.
The moral of the story is that if you use 96 DPI and see that your inserted images are still coming out blurry, check your Text Size settings in Windows and adjust the DPI value accordingly.
Best Answer
IDsizer will allow you to do this you can set a maximum file size from the interface and drop a batch of files to resize.
http://www.idimager.com/WP/?page_id=396
Just as an aside, be aware that the quality once you have done this may be quite poor. Also if the image will save at a high quality with out compression some files could be less than 10Kb.