A difficulty is that this would result in very big files. I never tried to implement this as the original FidoCAD philosophy was to create very small text files. However, times have changed since the year 2000.

Concerning the backward compatibility, this is not an unsolvable problem: after all, the format evolved during the development of FidoCadJ.

We could set a maximum size limit for the images that can be embedded. Perhaps we could implement a window that allows cropping the image, so you can use only the area you want to embed.

Choosing a maximum file limit is maybe difficult, as the limit would greatly depend from how the program is used. In certain situations it may be not appropriate.
Maybe a better approach can be to inform the user of the resulting file size while embedding the image.

Maybe a better approach can be to inform the user of the resulting file size while embedding the image.

Yes, good idea. Then, as I mentioned, we could provide the option to crop the image if needed, perhaps with different cropping methods (not just rectangular).