Ok, so the latest Outlook update (Dec 7, today), 17.6506.42002.0, still lacks this functionality.
And I confirmed from a user of a Lumia 830 running W8(.1)M that 8.1's Outlook does compress pics before sending. (Though it didn't offer the option of leaving them alone for those rare cases where a sender wants to transmit the full pic.)
So let me get this straight: The Microsoft Outlook team, each one presumably having a cell phone, not all of whom would have outlandish data plans with gigs of bandwith for free, decided to not just leave well enough alone but actually dramatically alter how Outlook in W10M handles picture attachments? i.e., took OUT the automatic compression of pics?
10 to 20 times (or more!) the amount of data for a picture is A LOT MORE DATA. Not only is it just a potential cost issue, it's also a time issue. Taking 10 or 20 times or more longer to transmit can be a HUGE deal. Imagine how long would it take to send a few 5+ MB pics if you had "only" 3G service.
Who thought this was good idea? Where were the milling mobs of disgruntled users who demanded that Microsoft leave their pics alone? Did the cellular companies pay Microsoft to make this change so that the could extract more money from users going over their monthly bandwith cap? What's the reasoning behind this change?
Even if a few users wanted a way of sending pics unaltered, Microsoft could have just provided it as an OPTION. They ALREADY HAD THE CODE IN PLACE TO COMPRESS PICS IN OUTLOOK 8.1. Why remove it? Just add the current method of only full-sized pics as an additional option!