The code in the attached file is very odd... it has some tags that simply shouldn't be there (</MM:DECORATION></MM_REPEATEDREGION>) We may have an isssue in our sample, or really I'm not sure what happened.
In your code the image height and width aren't specified as a different size, but there is a blank image tag (no source) with the smaller height, so something odd is going on. I see this:
<img src="" width="200" height="300" alt="" />
which has the new proportions you talked about but no source, and I see this:
<img src="images/ir-00.png" alt="Image Resizer" width="470" height="292" align="absmiddle" />
Which is the image that is visible, and you can see the width and height haven't been updated. I'd like to investigate the cause of this and what you are doing to get to this point.
I've opened a support ticket. I'd love to give you a call tomorrow and debug this with you directly in order to determine the cause and find a solution.