There are several image size limits when you start talking about the Google App Engine:
10 MB - download limit
1 MB - the limit of manipulation (I do not know what else can be called this)
But, people said that they exceeded the limit of manipulation when working with images smaller than 1 MB ...
So it looks like another limit is coming into play. I assume that there is some limitation on the size of the image after it has been converted to 24/32 bit pixels.
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