It should be fine. The maximum dimensions a bitmap and movieclip can have are 2880 x 2880 pixels, which will use up about 32MB of RAM when rendered on stage. There is a possibility that flash will crash if your dimensions are larger than these. If you are using CS4 then it is the software. It is super sluggish even with simple operations and has probably worsened to its worst point with those bitmaps. You may want to consider using another version of flash if it can't do the job or reduce the size of the image. I hate CS4. CS3 has always been the best. CS5 is coming up soon and i'm sure they have optimized it by then since there's a lot of complaints and rants about CS4's sluggishness online.
Edit: Whoops sorry didn't see you're using CS3. I didn't have those problems..... or never tried using large images....
How many bitmaps with that size are in your library? Do you have alot of items in the library? How many? How did you import them? I just imported 3 large 2000x2000 bitmaps with dragging image directly on stage from desktop and i'm not having any problems with transferring images from one folder to another within the library, it's pretty fast. Can you attach a sample fla file?
I'm using Windows XP too
Pentium 4 3.39GHz (Single Core only)
So it's probably not the specs cause mine are even lower.