I grabbed the latest version today, and saw some odd behavior. I loaded a foreground image which was immediately re-sized to be header sized, which expanded the image and made it look rough. I went back in and re-selected it, and eventually it came out the right, original size.
My two pennies - the way I would expect this to work is that if the image is too large, the default is that the header area acts as a window onto the overly large image. Ideally you could then manually 'move' the image such that the bit you wanted was visible, or resize to fit. If the image is smaller than the area, it gets imported at 100% and the user can choose how to manipulate it.
Not sure if that is the intended behavior of TT though.
R