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I have figured out how to solve the problem.
Within my HTML editor, where I create the layout, if I shrink the pictures to a smaller size (effectively specifying a size), those size settings seems to transfer to Calibre - even though they are not explicitly mentioned in the HTML code within Calibre - and the pictures retain a smaller size.
Whew! A simple fix! I am consistently finding this fix with Calibre 2.8
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