it is also odd that no matter the size of the saved image it still imports as giant. i tried resizing a picture down and it just got grainy.
if you submit the post then you can edit it to resize the picture. it doesn't seem to work on the preview tab, either. this is a pain, but works while they hopefully sort it out.

Since the Advanced tab was added to the Insert an image tool button, it is no longer possible to resize an image.
After you have selected an image (whether you do via the Simple tab or the Advanced tab), you get brought back to the tabs view. i.e.
From the Advanced tab, AFTER selecting the image, you SHOULD be shown
the insert/edit image screen.
(I'm using Chrome.)