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the system resizes them and displays the scaled down image (which is then - the scaled image - saved on your site), you probably need to investigate and make it clear to your users (say in your FAQ) the differences between prescaled links and plain images that get scaled by xoops.
The scaled image will be in the cache once it has been generated and viewed.
And work out which image hosting services links to use within your site.
As to what will and won't show from before - I have had headaches with some photohosting services changing the way they implement things.