If anybody cares, after researching this issue a little more via Google, I'm pretty sure the reason that the jpg mouseover looks so much duller than the gif original is that VSD compresses the jpg mouseover image significantly, resulting in a loss of color, while the gif does not lose any quality after compression. Does this make sense? So I think the only question remaining is why VSD converts the mouseover image to jpg, when it was originally placed into VSD as a gif, the same as the original image?

I think jpg look better than gif. I don't compress as I want image quality over file size. I'd rather have 16M colors vs 256.

But I don't have any control over the amount of compression VSD applies to a jpg. So I guess what you're saying is that you would save both the original image and mouseover image in jpg without compression, and then let VSD do the compression on both equally?

You can try that. I don't use VSD so I can't give you results other than to say that I don't see a lot of people reporting an issue here. So maybe they are using jpg.