Find the original image and create a copy of it.Do this instead of just deleting the file so that you can recover the compressed image easily if you need to. Rename the TranscodedWallpaper file to something like TranscodedWallpaper_old.
If you don’t do a lot of wallpaper switching and aren’t comfortable diving into the Registry to turn it off (see the next section), you can easily replace that compressed image with a high quality version using these steps: