The images are stored in 2 folders in  /images/rsgallery/  Original, Thumbs and Display. And yeah can delete them, but they'll still be in the database.

As far as I know the only way to limit size is to uncheck "keep original image".  This will only leave the compressed display image and a trimmed down thumbnail size.

You can also manually download the images in the original folder and run them thru a compresser (Photoshop automate) and reupload them on top of the original. That way don't have to do much in joomla.

As for limitted size of the folders, that would have to be done at the web server level, if it even handles it.