In Word 2003, yes you can... although I agree that it is best done in other
software. Unfortunately Word gives you "just enough rope to hang yourself",
as the adage so aptly states
Right-click the image & select Format Picture, then click the Picture tab of
the dialog. Hit the Compress button on that page & select Web/Screen. OK out
of the dialogs. *Note* the warning about the effect on print quality as the
image will be reduced to 96 ppi (not _d_pi - that's printer resolution).
Then *Save As* to create a copy of the file for emailing (unless you're
willing to sacrifice the print quality) & close the original without saving.