I don't have a Kobo reader; my only experience is with Kindles, Fire tablets, and Nooks.
On the first-generation Kindles, images will be full screen unless they are very small to begin with. There's no way to control that. I think the same is true of Kindle for iPad.
On the tablets, the reader can zoom any image (within reason) but otherwise the higher the resolution, the smaller the image, unless one uses a width="100%" instruction in the html.
BUT full screen means the dimensions of the text, with whitespace all around. A zoomed image will indeed reach to the edge of the screen, at least in one dimension.
I have never seen a distorted image, even when I use width="100%" and hold the tablet in landscape mode.
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