If someone really wants a RAW image of my crusty ass dog, for some reason, you can ask me to send it over something else. It's a waste of bandwidth for the majority of photos, which are view once per person, and never again. Nobody can host that much data for free without some big catch.
I'd love being able to just upload my 4.6MB image and getting it reduced down to sub 2MB, but I have to do that manually because Jerboa & co doesn't do it nor accept bigger images than 2MB.
Naah, Upload limit is instance wise like lemm.ee have 500kb. So, no it will not take 1mb file and reduce it to 500kb or less. That's why I don't even rely on default lemm.ee image upload. I just use my paid private image hoster.
Depends on the server, and I pretty much understand service providers why they're doing it, although it would be nice to buy some high-quality slots from them, as a way to support them.
It honestly probably isn't worth it for them. They don't want the hassle of having to deal with two different tiers of image hosting, especially when they're not primarily trying to be an image host