If you upload the image, it will be optimized before the upload happens.
Also, you can see the limit in the browser console
Let’s forget what you see here; it’s misleading with your issues.
From what I tested on your forum, posting an image link works well.
That would be welcome if you could provide another concrete example.
One thing that bothers me is why this image, for example, https://dronescene.co.uk/images/uploads/fullsize/20230227161106_DJI_0087_1.jpg is still failing on your forum (and I can’t reproduce it elsewhere)
The fix was merged and this is what will be displayed now when we link a remote image too large to be downloaded to Discourse when download remote images to local is set to true.