First of all I have to say that the ShoutBox theme is AMAZING!
I have searched for answers regarding image sizes in blog posts, how it gets either chopped or distorted. Trying to find a solution that mainly leaves the image ratio as it is with no copping, etc. No luck here, so I hope that it will get fixed some day... or is there something I miss?
Anyway, I found out a little solution to have your images in your blog post the way it is suppose to be, so no chopped/cropped images, no stretched or distorted images or ratio problems. Now this solution is not for everyone, unfortunately... if you have an iPhone with the Wordpress app installed then you're all set.
When I blog I just type in my randomness using my compter and then save it as a draft. Then transfer the pictures I want to have in my blog to my iPhone (using dropbox), then I open the draft in my Wordpress app on my iPhone and upload pictures in size Large. Then update the draft post. I refresh the WP post editor page on my computer and I see the pictures are in the post, and just drag them in between paragraphs, where I want the pictures to be and THAT'S ALL! I published the page and checked the blog post and it's exactly how I want it to be.
So, yeah it takes a litte longer, but it works for me. I am not sure if there are other smartphones where's there's a WP app available. If so, and you have the similar issues like me, you might wanna give it a shot. Hope this is helpful to some people.