Well I think I found a solution to this issue quicker and easier than I thought. It looks like all I have to do is add this code to the CSS file:
img {
border: 0 none;
width: 100%;
height: auto;
}After doing this my images are no longer cropped and they resize as I shrink the browser window. The only bad thing is that all images are resized to the full width of the theme, so an image that was originally 300px wide gets blown up to whatever the full width size of this theme is, making the image look all pixalated.
I can change the CSS width to 75% or lower but it would be nice if the images could display at their actual size width. I'll have to keep researching this to find out how. I'm sure it's possible.