You have two places where you can set the quality of bitmap images. The most obvious is in the Publish Settings window. There you can set an overall, movie-wide compression setting for bitmaps. You can override this setting by making individual compression settings for each imported bitmap. In the Library, select a bitmap file, right click and select the Properties... option. You will get a new window, Bitmap Properties... In this window you can set the compression that you want to use. You should be able to tune each image to get the quality that you need.
Thanks for the help Rob. However the problem I'm having is with the quality of flash jpg compression, not with how to change the compression. Perhaps you have noticed that jpg 80 in flash is very different from jpg 80 in photoshop? The result is that I have to set the quality very high in flash which results in large file sizes.
I usually use .png files, but that's a whole different situation. I never let Flash apply compression unless its absolutely necessary. Yes, the compressors in Flash are not at the same level as those in Photoshop.
Well first off, .jpg does not have transparency. So no, you can't have
Good quality JPG compression plus transparency?
For that you'll need a .png or a .gif.
I agree with Rob, never do any compression or resizing of images in Flash .Prepare the image of the correct file type and exact physical dimensions (as it will be used in Flash) before importing into Flash... use PhotoShop or whatever.
There is no free lunch... If your image is physically very large 1000+ x 1000+.... and you want high quality, it's going to be a pretty large file.
Since we have no examples of what size you think is too large, what quality is good/bad, or what the image dimensions are... we can only offer limited advice.
Correctly designing the project from the start is also very important. you might not be able to use a 1680 x 700 background image (too large a file), so you might look into using a much small image and tiling, that is repeating the same small image over and over... for example. So besides "image compression", there are design methods that can help reduce the final Flash file size.