I tried a 2703*1228 size image with png format, but actual image in form looks quite fuzzy.
Does anyone know the actual size limitation when inserting an image?
It is not easy to find any recommendations about the image sizes. According to this article there is no recommendation about the logo. Here is a link to a related topic/article that might help you.
There is a suggestion in UserVoice that you can vote on regarding "Guidelines for Theme images Needed". (I gave it a vote now)
Best regards, Magnus