There is no built-in facility for enlarging undersize images to fit a table. The following macro added to your mailmerge main document will address that for merges to new documents:
Code:
Sub MailMergeToDoc()
Application.ScreenUpdating = False
Dim Tbl As Table, iShp As InlineShape
ActiveDocument.MailMerge.Execute
For Each Tbl In ActiveDocument.Tables
With Tbl.Range
For Each iShp In .InlineShapes
With iShp
.LockAspectRatio = True
With .Range.Cells(1)
If .Height <> iShp.Height Then
If .Width <> iShp.Width Then
iShp.Height = .Height
If iShp.Width > .Width Then
iShp.Width = .Width
End If
End If
End If
End With
End With
Next
End With
Next
End Sub