Hi Bryan,
This is indeed a bug I'm surprised it has not been reported before since the bug has been there for a long time. I will fix this for the next release. Wish I had known sooner I would have fixed it for this release.
It can be solved like this:
1. Using a text editor open the file located at /Setup/applications/imagegallery/FeatureDefinitions/6000_ImageGalleryModule.config
2. Find the settings named GalleryWebImageHeightSetting and GalleryWebImageWidthSetting
3. Change the regexValidationExpression from ^[1-9][0-9]{0,2}$ to ^[1-9][0-9]{0,4}$ (the 2 was limiting to 2 digits).
4. Visit /Setup/Default.aspx
Now the above only changed the default for new instances of Image Gallery. To fix existing ones you need to run a query against the database.
UPDATE mp_ModuleSettings
SET RegexValidationExpression = '^[1-9][0-9]{0,4}
WHERE SettingName = 'GalleryWebImageHeightSetting' OR SettingName = 'GalleryWebImageWidthSetting'
Hope it helps,
Joe