I have an image with this markup
And I am using CSS to downsize it to 600
Wow, saved me a lot of time there!
i had a similar problem with an image in position: absolute where width was magically taking max-width value. Its weird because it doesn't do that when the image wasn't in position: absolute.
width: auto;
max-width: 200px;
height: auto;
max-height: 200px;
works great in IE8!