It's not Apple's fault in this case. It's hardly an OS X bug. They purposely removed an API they said they'd remove long long ago, it's not Apple's responsibility to maintain an API deemed deprecated and loooooong replaced. Even Windows/Microsoft has done something similar, albeit not breaking...
Click "Upload a File" and it'll upload the file, then you just attach it to the document. You can also click and drag the image into the box (from your desktop or a folder):
It's your resolution. VMK is 800x600 and your resolution is set to something much, much higher. So it seems "shrinked" because you have more pixels per inch. Specifically your resolution is 2880 px by 1800 px
Given the features of the app, all of those permissions make sense. Sometimes you need to pull in another permission because of how Android's API works, but the news and people are just heavily misinformed.
This is a common rule amongst many forums, the games are not permanent while the forums are. We are unable to moderate foreign languages and so this is how it's going to be.