The Dreamweaver uplaod can sometimes cause corruption in the code.
i have normally seen it happen as a result of the Dreamweaver Preferences -> Code Formatting setting being set to anything other than LF (Unix), though that is not the only cause
the allowed image size is set in webassist/kfm/initialize.php:
$kfm->defaultSetting('max_image_upload_width', 1024);
$kfm->defaultSetting('max_image_upload_height', 768);
the file manager does not support percentages over pixals.