Image Upload Resize as you go

I love the new media upload features and gallery option in 2.5.

I like the fact that for images, a thumbnail and medium size picture are created on upload, with dimensions which you can specify under Settings… Miscellaneous.

There are many circumstances when that is all that will ever be needed…. the full-size version is then redundant and is only taking up space on your web host.

Is it possible to include an option in the image uploader – something like “No Fullsize” or “Reduced Size Only”…. which will allow you to select large, digital-camera-sized images for upload and then only create the thumbnail and medium sized images and NOT store the full-sized image?

Or perhaps we could have a third size to be specified in Settings – Thumbnail, Medium and Max – so that the “full-size” image could be retained but actually be optionally resized too.

I think that would enhance the great usability features introduced in 2.5 by reducing redundant file storage.

I am actually trying to do this for myself but I’m struggling to find where in the WordPress code the image resizing happens. I’ll keep hunting!