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Amy, I don't think there's a problem with the size of the file uploaded, in fact I think the 5Mb upload limit is very generous....... it's the fact that you cannot seem to upload a batch of files at a time which makes it laborious.
PS that 'rule of thumb' about using a file of about 600px wide at 72ppi would actually make a file of not necessarily more than about 200kb.... possibly less, depending on compression.
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