The reason I ask is because I don't have any accounts with an image hosting service. I'd prefer not to sign up for yet another thing (free or otherwise). Especially if it's not going to work. Just thought someone who has already used one would say if it does or not.
There is no difference between a hosting service and direct upload in this regard.
Anything larger than 640x480 skews the overall display of the thread in the forum in many browsers. Some times you have to scroll two or three screen widths to read a whole message. That may not be an issue for one or two line posts, but if there's any lengthy posts, it's a real PITA. If you are going to resize any way, you would do all of us a huge favor by going to 640x480.
If you need to show detail, cropping the original pic may be more useful.