I don't know where this setting is in Photoshop Elements. I use ArcSoft PhotoStudio to resize jpg images. In that software, the image quality setting is in the "save as" dialog when you save the new image after resizing.
I'd suggest you look for a "compression level" or "image quality" setting in the resize, save or options/preferences dialogs.
Play around with the setting a little to see what you think, but I'd say you should be able to get a good quality image, 1600 pixels wide in less than a Megabyte using the 90% quality setting.


