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If you're using Premiere Elements, your results are going to be video resolution, which is essentially 640x480 pixels.
The only reason for your photos to be larger than that is if you plan to do some panning and scanning over the photos. If so, don't make them larger than 1000x750 pixels. Doing so won't give you higher quality results, but it will decrease the program's performance speed.
A question: if Joanne is doing a projection show, that will be fed by a computer, would a higher-rez Project Preset not work better? If so, she could use an HD Preset, and then output to one of the high-rez WMV formats to feed a projector (depends on the projector). Am I missing something here? Some of this would depend on the projection gear, but those specs should be easy to come by.
Now, some of this might depend on the source Assets, especially if SD video is included. That would be the limiting factor, and everything would need to be tailored around that.
Since the question stated it was for "pictures", I would agree with Bill and use a High Def project on premiere to give the computer and projector the best chance of better resolution.
Maybe. But then the computer will need to be able to play BluRay discs or, at the very least, hi-def video in, say, an MPEG format -- which most computers aren't equipped to do.
In my not so humble opinion, since this is going to be projected, the audience will not see a significant difference in hi-def anyway. Standard DV will work fine.
But, if Joanne wants to just do a hi-def slideshow, a more efficient way would be to use ProShow Gold or even PowerPoint instead of Premiere Elements. There's no point in taking this into a video format if you can get more efficient, cleaner results in a regular slideshow program.