GIF images in MobIPocket very definitely have a 64KB limit (actually slightly smaller than 64 KB) and I assumed that this was a PRC record size limit. If a GIF image is larger than ~64 KB, mobigen.exe, reduces its size (in pixels) until it fits in 64KB.
I don't know if larger JPEGs are allowed, or if MobiPocket just increases the lossyness(?) until it also fits in 64 KB.
See
Images in MobiPocket, which includes references to MobiPocket documentation and to other threads on this issue.