Earlier quoted context omitted.
There's a medium option: have an alert popup saying Convert the image to a format the site accepts (jpg)? [ ] Don't show this message again [OK] [Cancel]
Anecdotally, yesterday I accidentally learned that my relative clicks OK in any dialog window within 200ms without even attempt to read the message. So the alert you suggest would slightly help 1% of geeks and will annoy 99% of the users.
Also I'm not sure if you can generalize from your one relative to 99% of users.