Oh, I have a rather modern system. Anyway, I finally took time to trace through it, and it seems a call to StrechBlt is done everytime the window is drawn, and that lags the system down on my w2k3.
So, the image itself is 400x300, but since the page requests it as huge, the system will ask GDI to resize it to 9999999x9999999. This happens everytime the window is redrawn. For reasonable resizes, this would be fine, however here it is not.
I'd have to look at the actual implementation of the thing, but right now it looks like it's issue with GDI, and perhaps with driver implementation of the stretching support as well.