The new interface that has been forced on Blogger users is, to say the least, horrible. Many html options have simply been nixed or changed beyond all recognition. I'm particularly frustrated by images, as I can no longer post images at s800.
So... sorry about the reduced image size, and all the thousands of bugs they still haven't worked out of this new interface.
Word Press is still worse, though, so I doubt I will be moving any time soon.