Wow I clicked remove tag and it shrunk by about 300k.. that seems a little excessive for the album art which is only 200x200 pixels.

Yes, it is excessive. The problem is (as mentioned elsewhere) that the album art is in an awful format. It was Windows BMP, which is almost always much bigger than it needs to be. Then, there seems to be some kind of a padding bug where the ID3v2 tag is wasting gobs of space on empty bytes.