First off, make sure Word's image compression is switched off. Allowing Word to compress your image won't help it's quality one iota.

As for the 100% size, that doesn't mean reall much - it all depends on how many dpi the image says that 100% applies to. FWIW, an image of that size probably won't look much good any larger than 3.25*2in, which only allows for a 200dpi resolution. For quality work, 300dpi+ is typically called for.

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Cheers,
Paul Edstein
[Fmr MS MVP - Word]