By the way.... are you sure the size limit is on your side?
since you said the other party is getting the "exeeds size limit" message, probably his outgoing mail service is limitted!
Never had a problem with attachement size since I remember (from e-smith 4.2 to sme5.5), if you have the deffault installation (what I assume from your posts) you should not have any troubles on "your side"