Does Image Capture allow for output size adjustment

It depends on what you are using it for.

If you are downloading photos from your iPhone or camera card, no. It will copy the files exactly. You can of course then open them in Preview and adjust the size, if you want. Or, better, if there are plenty of files to adjust, have an Automator Service and apply to all of them.

Actually… you can combine the two so that, in a way, you could say Image Capture can change image size on import… make a folder action in Automator, assign it to the desired folder. A folder action is run every time a new file is added to the folder, so if Image Capture imports to said folder, the file modifications are then automatically applied.

On the other hand, if you were using Image Capture to capture from a scanner, then of course you can control the area imported and the resolution.

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