On what computer operating system is your Premiere Elements 12 running? And, have you updated 12 to 12.1 using an opened project's Help Menu/Update? If not, please do so.
Please state your video project goal - file saved to hard drive or a burn to disc product (DVD-VIDEO on DVD disc, AVCHD on DVD disc, or Blu-ray disc format on Blu-ray disc).
Are you targeting your Premiere Elements 12 question at the previewing aspects of the matter or at the end product quality.
If you have a 64 bit computer, there is no Premiere Elements 12 program pop up with a "too large" message for your photos as there is in earlier versions using 32 bit operating system. But, however high the photo resolution, the end product specifications set resolution for the video. Consider, just because you can import photos with higher resolution does not mean you should. Numbers of photos and computer resources will define your limits. If you have a 32 bit instead of a 64 bit computer operating system, you will get the "too large" message which will block you from importing the photo that is triggering the message.
Please refer to post 6 in the following for my explanation of that situation.
Generalization. The burn to disc product specs max 1920 x 1080 for AVCHD on DVD and Blu-ray disc format on Blu-ray disc.
Export to file saved to the computer hard drive offers Advanced settings to customization.
Tip: For disc end product, photos seem to be sharper when a DSLR 1080p project preset is used in conjunction with 1920 x 1080 photos.
Please give more information so that we can fine tune and target the information that you seek.