Image Capture rotation degrades images

Using the Image Capture application to rotate images causes the pictures to be re-compressed at a dramatically lower quality, causing pictures to look much worse than they should. Paul Rodriguez writes: "An Apple Store employee demonstrated it for me by taking a picture and saving it first without rotating it and then after rotating it. The size of the image was halved after rotation."

This confirms a related problem we previously noted.

Update: Erik Muenker reports that downloaded images from his Sony digital camera are inferior in OS X to the same images downloaded in OS 9 - even without ant rotation. He notes that the files size of the same picture changes from 1.6MB in OS 9 to about 512KB in OS X. This symptom first appeared after updating to Mac OS X 10.1.