Step to Reproduce

1. Attach a image to a Confluence page
2. Resize it to 300px or below.

You will see that the image quality decrease tremendously.

300px

310px

As you can see, there is a big difference between this two image even though there is only 10px difference is their size.

Upon inspection.

You will see that the Confluence is trying to resize a thumbnail

src="/download/thumbnails/753668/2013-10-14%2009.03.34.png?version=1&modificationDate=1381934123961&api=v2

instead of the source

src="/download/attachments/753668/2013-10-14%2009.03.34.png?version=1&modificationDate=1381934123961&api=v2"

Somehow, if you resize it to 300px or below, the Confluence will automatically try to resize the thumbnail instead of the original attachment. The size of the thumbnail is a lot smaller than the original size therefore when the Confluence try to increase or decrease the size, the quality drop tremendously.