Loading images from a web server is basically no different from loading any other file from a web server; in that sense, yes, loading too many images could slow the server down, and/or lead to DOS, but not because you're working with images, but rather because you're reaching the maximum throughput of your web server. (The last time I played around with stressing an IIS web server, on a slow application, it could handle >160 requests / second; and would probably be able to do more if it were only loading static files)
If you are concerned about the load images cause on an application server, you could look into moving static content to a different server; say images.mydomain.com being on a different machine then mydomain.com.
One other note; if the images are all of the form of icons- generally of small size, you could look into a css sprite-sheet to go from, say, 20 image specific HTTP GET's to ~1.
Response to edit: 10,000 images /hr at 700k each would be about 2-3/sec (not accounting for variances), putting you into needing a few mbps of upload bandwidth. At that rate, you probably would want it on a different server; on a load balanced cluster; or on a CDN. At that rate, the overhead for CPU processing won't cause a DOS any faster, but bandwidth limitations might.