Oh sorry! The post I linked to doesn't mean display a huge image like you're doing now, it means: if you want to display a downsized image, downsize it yourself (using an image editing application) before uploading it instead of letting WP do the downsizing. But that would account for a very small improvement in quality. The issue you've got is different. It's due to a very strange (in my opinion, very bad) idea in the theme you're using: its CSS includes a filter that creates a semi-transparent veil in front of everything.
There's nothing you can do about it, except if you buy the Custom Design upgrade. Two suggestions:
1) Post in the Themes forum and complain about this. The WP theme team monitor that forum, they'll see your thread and maybe do something about the issue.
2) Switch to a better theme.