Matt,
The compress pictures feature in Pub 2003 and 2007 is different than what
you are talking about. If you insert an image into a Pub page, and then size
it on the page at less than full size, the compress pictures feature
resamples the image to the smaller size, and gives you the option of
optimizing the dpi for print, web etc.
If you select an image on a Pub page, go to Format > Size tab the scale will
show less than 100% height and width if the image has been inserted and down
sized on the page. After using the Compress graphics/pictures function, that
image will be resampled and will show 100%.
Reference: Compress graphics file sizes to create smaller Publisher Web
pages (2003):
http://office.microsoft.com/en-us/publisher/HA011266301033.aspx
Reference: Compress Pictures dialog box (2007):
http://office.microsoft.com/en-us/help/HA100363901033.aspx?pid=CL100605171033
DavidF