Image options can be mostly controlled via the template set-up in InDesign - here you can set the parameters around size, placement of text and images, etc.
If you are allowing users to replace images, then the new uploaded images should appear the same size as the one it is replacing.
If using a transparent image like a PNG file to overlay on top of a background, the background should show through the transparent areas. You can also change the opacity/transparency of an image.
Download file sizes and formats for Web-to-Print templates
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