On my page, I'm populating quite a few images, they aren't SUPER high resolution, but I aggregate the images, so I don't have the stored in smaller sizes. When I start putting lots on the page, it gets sluggish. Is there something I can do to fix this? Like some kind of on-the-fly image compression?
Have you looked into techniques of lazy-loading your images? http://www.appelsiini.net/projects/lazyload
Looks like the problem happened because you were using the full-res pictures to display thumbnails. This is a performance nightmare! You might benefit from reading:
http://ask-leo.com/why_do_some_website_pictures_display_so_slowly.html