Odd that they didn't use PNG for the tiles. (perhaps a limitation of seadragon).
It would be interesting to see a comparison with AppEngine, S3, and CloudBurst. Obviously AppEngine won this because it was free, but 10GB/day is less than $2/day on both S3 and CloudBurst, so it isn't overly expensive to run AWS.
I checked Deep Zoom Composer, software that was used to create tiles [1].
It allows also PNG tiles export for "SeaDragon Ajax" output type, so it was probably just the decision of the author of this site to use JPGs.
I tried to convert one randomly picked tile. It was 58KB JPG (16M colors), 38KB PNG (16M colors), 9KB PNG (256 colors), 13KB GIF (256 colors).
So yes, PNGs would make a faster site and save some bandwidth.
Though you cannot export 256 color PNGs, so for the best performance, you would need to run something like ImageMagick conversion script on all the tiles (with the danger of getting noticeable seams if neighboring palettes would clash).
No, you're right - I'm no web expert, and I didn't notice the option in deep-zoom composer to change format. The Seadragon dev told me to try png for this type of image and it cut the data down from 93mb to 25mb - much faster now. (http://lovepixelzoom.appspot.com)
Impressive, but seems like some rounding issue which could be improved... If I scroll, move or zoom, as things settle, the tiles oscillate between 2 pixels, like they are being rounded badly, or perhaps one tiles position is being based on the rounded position of the last, instead of the exact position.
http://antsyawn.blogspot.com/2009/01/lovepixel-mashup.html