I set it back to 755 for now. Guess what:
http://www.rlhanson-online.com/incoming/dali-lahma.jpg works fine in both IE and FF.
Whatever you had in your htaccess file was the problem, per the error that you got as far as the image not loading. I see the file is gone now, and so is the problem.
As for your filesize limits, I have made a file in your /incoming directory called php.in and put this in it:
upload_max_filesize = 100M
post_max_size = 100M
Which will override the global php.ini settings which are probably set at 8 megs. if this folder needs 777 to work you might consider moving outside of your web root e.g. /home/yoususername/incoming then have your scripts in your web root load the files from there so that your folder that is set 777 does not let the whole world have access to writing to whatever you have in there, without explicit permission form your scripts/user.
Why you dont get upload confirmation in Firefox, thats an issue for you and JMV.