Photo Download Size "Original (Full Quality)" setting??

Are you using a Photos or Albums template?
What size in px is your image?
Any image from my camera is about 3070x2300 when exported from iPhoto. This would require a web page wider than 3070 px to display it! It would also take a long time for the page to download in the browser.
If you want to be able to offer a full size download, create a ZIP of your image from Finder/File/Compress.
Create a text link to this file and, in the "Link" inspector choose "LInk to a file:" so that the photo can be downloaded from your site and opened full size when unzipped.
The text link will appear as the file name in iWeb. Overwrite it with whatever you want.
Note that the link will not work in iWeb but will on the published site.

I found in this iWeb test pertained more to the image pixel dimensions than the jpg compression level of the downloadable file as you found out.

Happy New Year

TIP: For insurance against the iPhoto database corruption that many users have experienced I recommend making a backup copy of the Library6.iPhoto (iPhoto.Library for iPhoto 5 and earlier) database file and keep it current. If problems crop up where iPhoto suddenly can't see any photos or thinks there are no photos in the library, replacing the working Library6.iPhoto file with the backup will often get the library back. By keeping it current I mean backup after each import and/or any serious editing or work on books, slideshows, calendars, cards, etc. That insures that if a problem pops up and you do need to replace the database file, you'll retain all those efforts. It doesn't take long to make the backup and it's good insurance.
I've created an Automator workflow application (requires Tiger or later), iPhoto dB File Backup, that will copy the selected Library6.iPhoto file from your iPhoto Library folder to the Pictures folder, replacing any previous version of it. It's compatible with iPhoto 6 and 7 libraries and Tiger and Leopard. Just put the application in the Dock and click on it whenever you want to backup the dB file. iPhoto does not have to be closed to run the application, just idle. You can download it at Toad's Cellar. Be sure to read the Read Me pdf file.

Note: There's now an Automator backup application for iPhoto 5 that will work with Tiger or Leopard.

No, it can't. But unless you're going to print a very large print you shouldn't notice the effect of the compression on the photo particularly if the pixel dimensions are kept the same.

OT

Not too big depending on the pixel dimensions of the file. 150 dpi is about as low a resolution I like to print at and that would require 1500 x 1950 image file. Most current cameras take larger photos than that. My Canon IS700 gives me 2816 x 2112. That would give an approximately 200 dpi 10 x 13 print. But again, your preferences might require a higher resolution. For comparison Apple uses 300 dpi for their books, prints, etc.

If you want to upload the actual original file you could put it in your public folder on the iDisk and let the visitors download from there. Just zip each photo and give it the same file name as what's in the slideshow (you wouldn't have to give downloading privileges, just a link top the public folder on your iDisk: http://idisk.mac.com/your_MobileMe Account_Name-Public?view=web. Then the can download the full, uncompressed original file.

OT

Because iWeb has to reduce it to fit your page width as I pointed out above.
Try making your page 3200 px wide by 3000 px high and see what happens.
I would be interested to know the result!

Mert:

You're right. It's about the download file size. I guess it's Apple's attempt at making the upload and download faster. It's been my experience that as long as the pixels remain the same Apple's file size reduction doesn't affect the image quality for any of the uses I've put the files to. Yes, you can really reduce the file size considerably and it will greatly reduce the image quality. But the amount that Apple uses just hasn't made a difference for me as an amateur, family oriented user.

You do have a good chance at getting an answer from Apple if you use http://www.apple.com/feedback/iweb.html. I had asked about iPhoto book materials, print quality, etc. and got a comprehensive reply back. Good luck.