sure - the only other thing is if it's a web document... - I understand that in some instances, when images are optimised, they get converted to jpg [but I could be wrong, as I don't make websites in xara]

I totally agree about the degradation - and if the image is not continuous tone I don't think it should ever be in a lossy format [and I'm not even convinced for photos, except where the compression is more important than the possible quality issues]