The image you see in Booksmart is not the actual image that gets used for print, when you import your images into Booksmart, it creates smaller versions of your images to use in the software. When you have finished designing and upload, Booksmart then references where your original images were and uploads these.
I've had mixed results with Blurb printing 2 of the same book at different times in 2009, and again early 2010. The very first book I printed I was impressed with, I spent a hell of a lot of time proofing all the images in Photoshop using their B3 printing profile, and was happy to actually find the images looked super similar in the printed book version. However the next two books I payed for the extra service of using the B3 program again, which they have now ditched, and these two books were printed at different locations, one in Sweden from memory and one in the US. Both had poor quality printing, with visible banding on the front cover, and in both books all images had a slight yellow colour cast even though I used the same images as the first book. Both these books were poorly constructed also, the actual inside of the 2nd book was glued to the front/back cover on a noticable angle.
However, I think they are slowly getting there and improving their product, and are the best of the lower price/quality range in self made books. I was really happy with the first printing of my book considering the effort and time I put into it. They have very good customer service and you'll have no trouble sorting out any issues should you have any.