You need to use a photo editor as wangbar suggested. If you haven't used one before I would suggest you aviod batch processing for the moment. Fireworks would do fine, as would Image Ready or Photoshop. Failing that, Microsoft PhotoSuite, or JASC PaintShop Pro would both do fine as well. You need to open your image in the photo editor, use a resize command to make the image the physical proportion you want (if the image has to be square and it isn't to begin with, you may need to crop the required area before you resize).
Once you've done this, you need to optimise the filesize. I don't know much about any of the other packages, but in Photoshop you can choose "Save for Web", which gives you profiles under which you can save your image. I recommend JPG High Quality (60%) - that gives good quality images at low filesizes.
When you have made the image the right size, and reduced the filesize to as low as possible without sacrificing quality, import the image into Flash and you're ready to go. I suggest you leave the JPG compression at it's default - any more compression will start to pixelise the images.
This will save filesize in the SWF, because you are importing smaller files (ergo the Flash compression will be able to reduce a smaller original size even further) - you should notice a marked difference, especially if you are redcucing some images to more than 50% their original size!