How to stop images in apple mail signature is being magnified

It sounds like there is a DPI limitation in Mail for images in signatures.

This thread on Apple's discussion forums details what one user did to resolve the issue:

I had 2 things too big in my image settings; the canvas size (which was 14cm long!) and the DPI (which was 300dpi) I have since changed to approx 8cm long and 100DPI and it now displays the logo in the signature without increasing the size of it to fit the size of the window.

I would recommend instead converting to 72 DPI, which is a standard; based on comments I've read elsewhere I believe it's converting higher DPI images to 72 DPI, which in turn causes the image size on-screen to increase.