Picture Chooser
The Picture Chooser first displays an "Open" button on the screen.

Click on this button to upload the image of your choice.
A full size image has a ratio of "1", and that is the default setting here.

If you set a ratio of 0.5 for example, the aspect of the image would be preserved, but it would be half the size.

If you set a ratio of 2, the aspect of the image would be preserved, but it would be twice the size.
Wow! That image is far too big!
Let's set a smaller width.

Changing the width will also change the height proportionally.

Click on the "Set width" button.
Changing the height instead will also change the width proportionally.
The "Set width" button turns blue, and you can type in the value as shown.
Note that a "Re-size" button has appeared.
Click on this.
You are then shown a preview of the re-sized image.
Click on the big X button in the top left-hand corner to close the window.
Upon return to the main screen, you will note that the "Save" button has appeared again. Click on this to close the Picture Chooser and transfer your re-sized image to the main grid.
The WP3 Picture Chooser is called when you double-click on a picture widget, either to provide an image when it is empty, or when you wish to change the image contained by the widget. It is also called when your web page requires an image (usually small) to serve as background wallpaper.

For the widget, calculating the exact size of the image required can usually be done fairly easily by examining the divisions of the Work Grid surrounding it. (The larger grid boxes of 80x80 px are divided into ten both horizontally and vertically, so each little box is 8x8px.) For wallpaper, you might want to experiment with small basic images of different sizes to see which size of repeated image looks the best as background.

Happily, the WP3 Picture Chooser is also an image re-sizer, so you do not need to use an external program to perform this task.
First and foremost, if you intend to introduce a number of pictures of decent size into your web page, it is a good idea to make sure the memory allocated by the Firefox browser is sufficient, otherwise your work can actually grind to a halt. It is very easy to prevent this by following the brief instructions given HERE.